Update (4:45 p.m.): Updated with Tuesday market close information and one-year high price.
NEW YORK (TheStreet) -- Arotech (ARTX - Get Report) surged more than 50% to a one-year high of $6.34 on Tuesday after the defense and security products company announced its battery division had received more than $2 million in orders from "two leading defense companies and manufacturers of military equipment," according to the company's statement.
The company noted the companies are existing Arotech customers. One of the orders was for the development and manufacture of Lithium-Ion based batteries to replace Lead-Acid batteries in military vehicles.
"We have invested in the development of batteries for military vehicles using Lithium-Ion technology replacing the more traditional Lead-Acid chemistry. While Lithium-Ion provides a much higher energy density, the challenge is in managing and protecting what is a more volatile battery chemistry," Arotech Chairman and CEO Robert S. Ehrlich said in a statement. "The technology underpinning our battery management systems which protect these batteries is sophisticated, advanced and ideal for the tough military environment.
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"These customers are top defense manufacturers with sales of equipment throughout the world for use by various militaries using advanced technologies. Their equipment is expected to be of the highest caliber and failsafe. The fact that our customers continue their purchase of our batteries means they trust the reliability, quality and safety of our products."
The stock closed up 50.97% to $6.25, up $2.11 from its previous close of $4.14. More than 10.58 million shares changed hands, more than 10 times the average volume of 904,795. The stock hit a low of $4.09 for the day and holds a one-year low of $1.
TheStreet Ratings team rates AROTECH CORP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AROTECH CORP (ARTX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ARTX's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ARTX's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Aerospace & Defense industry and the overall market, AROTECH CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for AROTECH CORP is currently lower than what is desirable, coming in at 28.70%. Regardless of ARTX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.71% trails the industry average.
- You can view the full analysis from the report here: ARTX Ratings Report