3 Stocks Pushing The Telecommunications Industry 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 Telecommunications industry as a whole closed the day down 1.8% versus the S&P 500, which was down 1.7%. Laggards within the Telecommunications industry included Otelco ( OTEL), down 4.5%, Optical Cable ( OCC), down 11.1%, WPCS International ( WPCS), down 4.4%, Hong Kong Television Network ( HKTV), down 3.5% and Envivio ( ENVI), down 5.5%.

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

China Unicom (Hong Kong ( CHU) is one of the companies that pushed the Telecommunications industry lower today. China Unicom (Hong Kong was down $0.62 (4.0%) to $15.06 on average volume. Throughout the day, 402,859 shares of China Unicom (Hong Kong exchanged hands as compared to its average daily volume of 423,700 shares. The stock ranged in price between $15.03-$15.18 after having opened the day at $15.18 as compared to the previous trading day's close of $15.68.

China Unicom (Hong Kong) Limited, an investment holding company, provides cellular and fixed-line voice, broadband and other Internet-related, information communications technology, and business and data communications services in China. China Unicom (Hong Kong has a market cap of $37.0 billion and is part of the technology sector. Shares are up 16.6% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate China Unicom (Hong Kong a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates China Unicom (Hong Kong as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's revenue growth has not been good.

Highlights from TheStreet Ratings analysis on CHU go as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • CHINA UNICOM (HONG KONG) LTD has improved earnings per share by 30.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CHINA UNICOM (HONG KONG) LTD increased its bottom line by earning $0.71 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.71).
  • CHU, with its decline in revenue, slightly underperformed the industry average of 4.1%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, CHINA UNICOM (HONG KONG) LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.

You can view the full analysis from the report here: China Unicom (Hong Kong Ratings Report

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At the close, Envivio ( ENVI) was down $0.08 (5.5%) to $1.35 on light volume. Throughout the day, 29,272 shares of Envivio exchanged hands as compared to its average daily volume of 55,400 shares. The stock ranged in price between $1.35-$1.40 after having opened the day at $1.40 as compared to the previous trading day's close of $1.43.

Envivio, Inc. provides software-based IP video processing and distribution solutions that enable the delivery of high-quality video to consumers worldwide. Envivio has a market cap of $42.4 million and is part of the technology sector. Shares are up 14.2% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Envivio a buy, no analysts rate it a sell, and 1 rates it a hold.

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

Highlights from TheStreet Ratings analysis on ENVI go as follows:

  • 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 Software industry. The net income has significantly decreased by 85.3% when compared to the same quarter one year ago, falling from -$2.93 million to -$5.43 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 Software industry and the overall market, ENVIVIO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$3.89 million or 62.68% 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 56.62%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 81.81% 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.
  • ENVIVIO INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ENVIVIO INC continued to lose money by earning -$0.46 versus -$0.63 in the prior year. For the next year, the market is expecting a contraction of 15.2% in earnings (-$0.53 versus -$0.46).

You can view the full analysis from the report here: Envivio 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.

WPCS International ( WPCS) was another company that pushed the Telecommunications industry lower today. WPCS International was down $0.01 (4.4%) to $0.21 on light volume. Throughout the day, 65,821 shares of WPCS International exchanged hands as compared to its average daily volume of 333,700 shares. The stock ranged in price between $0.20-$0.24 after having opened the day at $0.24 as compared to the previous trading day's close of $0.22.

WPCS International has a market cap of $3.1 million and is part of the technology sector. Shares are down 22.8% year-to-date as of the close of trading on Monday.

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

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