3 Stocks Pushing The Services Sector Lower

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

The Services sector as a whole closed the day down 1.4% versus the S&P 500, which was down 1.7%. Laggards within the Services sector included China Yida ( CNYD), down 5.0%, Spar Group ( SGRP), down 1.9%, Bowl America ( BWL.A), down 3.1%, Alon Blue Square Israel ( BSI), down 3.1% and John Wiley & Sons ( JW.B), down 2.8%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

Royal Philips ( PHG) is one of the companies that pushed the Services sector lower today. Royal Philips was down $1.06 (3.7%) to $27.83 on average volume. Throughout the day, 1,044,868 shares of Royal Philips exchanged hands as compared to its average daily volume of 927,200 shares. The stock ranged in price between $27.83-$28.05 after having opened the day at $27.98 as compared to the previous trading day's close of $28.89.

Koninklijke Philips N.V. engages in healthcare, consumer lifestyle, and lighting businesses worldwide. Royal Philips has a market cap of $26.5 billion and is part of the consumer durables industry. Shares are down 0.4% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Royal Philips a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Royal Philips as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on PHG go as follows:

  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.
  • 44.83% is the gross profit margin for KONINKLIJKE PHILIPS NV which we consider to be strong. Regardless of PHG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PHG's net profit margin of 2.15% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $956.24 million or 24.81% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Industrial Conglomerates industry and the overall market, KONINKLIJKE PHILIPS NV's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Royal Philips Ratings Report

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At the close, Spar Group ( SGRP) was down $0.03 (1.9%) to $1.59 on light volume. Throughout the day, 126 shares of Spar Group exchanged hands as compared to its average daily volume of 4,300 shares. The stock ranged in price between $1.59-$1.59 after having opened the day at $1.59 as compared to the previous trading day's close of $1.62.

SPAR Group Inc., together with its subsidiaries, provides merchandising and other marketing services worldwide. Spar Group has a market cap of $32.5 million and is part of the consumer durables industry. Shares are up 13.0% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Spar Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on SGRP go as follows:

  • SGRP's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • SGRP's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SGRP has a quick ratio of 2.02, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SPAR GROUP INC reported flat earnings per share in the most recent quarter. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SPAR GROUP INC increased its bottom line by earning $0.15 versus $0.13 in the prior year.
  • SGRP has underperformed the S&P 500 Index, declining 20.50% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for SPAR GROUP INC is rather low; currently it is at 23.56%. Regardless of SGRP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SGRP's net profit margin of 1.23% is significantly lower than the industry average.

You can view the full analysis from the report here: Spar Group Ratings Report

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China Yida ( CNYD) was another company that pushed the Services sector lower today. China Yida was down $0.11 (5.0%) to $2.10 on light volume. Throughout the day, 145 shares of China Yida exchanged hands as compared to its average daily volume of 2,400 shares. The stock ranged in price between $2.10-$2.10 after having opened the day at $2.10 as compared to the previous trading day's close of $2.21.

China Yida Holding Co., together with its subsidiaries, is engaged in the tourism and advertisement businesses in the People's Republic of China. The company operates through two segments, Advertisement and Tourism. China Yida has a market cap of $8.7 million and is part of the consumer durables industry. Shares are down 5.2% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates China Yida as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on CNYD go as follows:

  • CHINA YIDA HOLDING CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, CHINA YIDA HOLDING CO swung to a loss, reporting -$4.24 versus $0.06 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has significantly decreased by 249.6% when compared to the same quarter one year ago, falling from -$3.63 million to -$12.68 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Media industry and the overall market, CHINA YIDA HOLDING CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$2.52 million or 19.92% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 59.18% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

You can view the full analysis from the report here: China Yida Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.