13 Service Dividend Stocks With Highest Short Float Ratio

 | Jun 12, 2012 04:07AM ET

The services sector is the second basic stage of the economy behind the agricultural. Stocks from the sector are characterized by low margins and undercapitalized business models.

At the stock markets are 908 companies linked to the sector with a total market capitalization of USD 48.2 trillion. The average sector yield amounts to 1.92 percent and the average P/E ratio is 20.11. The highest dividend paying industries are consumer services, publishing and computer wholesale.

I screened the sector by dividend stocks with the highest amount of short selling stocks, measured by the float short ratio. The ratio shows how many stocks are shorted by investors. Companies with a high ratio of float short have a little upside potential if investors need to close their short position. Thirteen dividend stocks from the services sector have a float short ratio of more than 25 percent.

Strayer Education (NASDAQ:STRA) has a market capitalization of $1.07 billion. The company employs 2,140 people, generates revenues of $627.43 million and has a net income of $106.04 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $200.67 million. Because of these figures, the EBITDA margin is 31.98 percent (operating margin 28.55 percent and the net profit margin finally 16.90 percent).

Financial Analysis: The total debt representing 50.84 percent of the company’s assets and the total debt in relation to the equity amounts to 277.82 percent. Due to the financial situation, a return on equity of 97.16 percent was realized. Twelve trailing months earnings per share reached a value of $8.11. Last fiscal year, the company paid $4.00 in form of dividends to shareholders. The company has a float short of 35.97 percent and the short ratio amounts to 24.68.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 11.09, P/S ratio 1.74 and P/B ratio 25.67. Dividend Yield: 4.35 percent. The beta ratio is 0.69.