3 Stocks Pushing The Diversified Services Industry Lower

The Diversified Services industry as a whole closed the day down 2.1% versus the S&P 500, which was down 1.3%. Laggards within the Diversified Services industry included VirtualScopics ( VSCP), down 1.8%, SmartPros ( SPRO), down 4.5%, MGT Capital Investments ( MGT), down 19.4%, Cartesian ( CRTN), down 2.2% and National American University Holdings ( NAUH), down 4.8%.

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

Thomson Reuters ( TRI) is one of the companies that pushed the Diversified Services industry lower today. Thomson Reuters was down $0.98 (2.4%) to $39.69 on heavy volume. Throughout the day, 1,206,953 shares of Thomson Reuters exchanged hands as compared to its average daily volume of 761,000 shares. The stock ranged in price between $39.67-$40.56 after having opened the day at $40.36 as compared to the previous trading day's close of $40.67.

Thomson Reuters Corporation provides intelligent information for businesses and professionals worldwide. The company sells electronic content and services to professionals primarily on a subscription basis. Thomson Reuters has a market cap of $31.8 billion and is part of the services sector. Shares are up 0.8% year-to-date as of the close of trading on Wednesday. Currently there are 4 analysts who rate Thomson Reuters a buy, no analysts rate it a sell, and 9 rate it a hold.

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TheStreet Ratings rates Thomson Reuters as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and reasonable valuation levels. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on TRI go as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Media industry average. The net income increased by 5.2% when compared to the same quarter one year prior, going from $249.00 million to $262.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that TRI's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • TRI, with its decline in revenue, underperformed when compared the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for THOMSON-REUTERS CORP is currently lower than what is desirable, coming in at 25.81%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.62% trails that of the industry average.

You can view the full analysis from the report here: Thomson Reuters Ratings Report

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At the close, National American University Holdings ( NAUH) was down $0.13 (4.8%) to $2.56 on light volume. Throughout the day, 6,930 shares of National American University Holdings exchanged hands as compared to its average daily volume of 9,800 shares. The stock ranged in price between $2.52-$2.60 after having opened the day at $2.54 as compared to the previous trading day's close of $2.69.

National American University Holdings, Inc. owns and operates National American University (NAU) that provides postsecondary education services primarily for working adults and other non-traditional students in the United States. The company operates through two segments, NAU and Other. National American University Holdings has a market cap of $69.0 million and is part of the services sector. Shares are down 0.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates National American University Holdings 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, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on NAUH go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 31.1% when compared to the same quarter one year prior, rising from $1.12 million to $1.46 million.
  • NAUH's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.45, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for NATIONAL AMERN UNIV HLDG INC is currently very high, coming in at 75.64%. Regardless of NAUH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.03% trails the industry average.
  • NAUH has underperformed the S&P 500 Index, declining 9.82% 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.
  • Net operating cash flow has significantly decreased to -$0.64 million or 136.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: National American University Holdings Ratings Report

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VirtualScopics ( VSCP) was another company that pushed the Diversified Services industry lower today. VirtualScopics was down $0.04 (1.8%) to $2.15 on light volume. Throughout the day, 2,170 shares of VirtualScopics exchanged hands as compared to its average daily volume of 3,300 shares. The stock ranged in price between $2.14-$2.19 after having opened the day at $2.14 as compared to the previous trading day's close of $2.19.

VirtualScopics, Inc. provides imaging solutions to the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $6.8 million and is part of the services sector. Shares are down 30.9% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates VirtualScopics as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on VSCP go as follows:

  • 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 Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 33.41%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -18.11% is significantly below that of the industry average.
  • VSCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.69%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Life Sciences Tools & Services industry average, but is greater than that of the S&P 500. The net income increased by 25.3% when compared to the same quarter one year prior, rising from -$0.73 million to -$0.55 million.
  • VIRTUALSCOPICS INC has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. 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, VIRTUALSCOPICS INC reported poor results of -$1.20 versus -$1.02 in the prior year.

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

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