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3 Stocks Pushing The Materials & Construction 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 or Stephanie Link.

The Materials & Construction industry as a whole closed the day down 0.3% versus the S&P 500, which was up 0.1%. Laggards within the Materials & Construction industry included Industrial Services of America ( IDSA), down 3.0%, China Recycling Energy ( CREG), down 2.4%, Deltic Timber ( DEL), down 3.0%, Nortek ( NTK), down 2.2% and Vertex Energy ( VTNR), down 10.7%.

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

Nortek ( NTK) is one of the companies that pushed the Materials & Construction industry lower today. Nortek was down $1.93 (2.2%) to $84.24 on light volume. Throughout the day, 7,590 shares of Nortek exchanged hands as compared to its average daily volume of 26,200 shares. The stock ranged in price between $83.47-$85.45 after having opened the day at $84.54 as compared to the previous trading day's close of $86.17.

Nortek, Inc. manufactures and sells products for remodeling and replacement, residential and commercial new construction, manufactured housing, and personal and enterprise computer markets primarily in the United States, Canada, and Europe. Nortek has a market cap of $1.3 billion and is part of the industrial goods sector. Shares are up 15.5% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Nortek a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Nortek as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins.

Highlights from TheStreet Ratings analysis on NTK go as follows:

  • The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • NORTEK INC has improved earnings per share by 43.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORTEK INC swung to a loss, reporting -$0.56 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($2.94 versus -$0.56).
  • Net operating cash flow has significantly decreased to -$52.40 million or 261.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 13.07 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NTK maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.

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

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