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3 Stocks Pushing The Aerospace/Defense 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 Aerospace/Defense industry as a whole closed the day down 1.0% versus the S&P 500, which was unchanged. Laggards within the Aerospace/Defense industry included Moog (MOG.B), down 1.5%, CPI Aerostructures (CVU), down 4.0%, Erickson (EAC), down 14.2%, Innovative Solutions and Support (ISSC), down 2.2% and Ducommun (DCO), down 4.0%.

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

Innovative Solutions and Support (ISSC) is one of the companies that pushed the Aerospace/Defense industry lower today. Innovative Solutions and Support was down $0.17 (2.2%) to $7.66 on light volume. Throughout the day, 37,378 shares of Innovative Solutions and Support exchanged hands as compared to its average daily volume of 83,200 shares. The stock ranged in price between $7.58-$7.91 after having opened the day at $7.77 as compared to the previous trading day's close of $7.83.

Innovative Solutions and Support, Inc., a systems integrator, designs, manufactures, sells, and services flight guidance and cockpit display systems. Innovative Solutions and Support has a market cap of $126.1 million and is part of the services sector. Shares are up 7.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Innovative Solutions and Support as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on ISSC go as follows:

  • ISSC's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 52.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • ISSC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.84, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to -$0.59 million or 1.51% when compared to the same quarter last year. Despite an increase in cash flow, INNOVATIVE SOLTNS & SUPP INC's cash flow growth rate is still lower than the industry average growth rate of 43.95%.
  • INNOVATIVE SOLTNS & SUPP INC's earnings per share declined by 28.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, INNOVATIVE SOLTNS & SUPP INC reported lower earnings of $0.12 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.12).
  • 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 Aerospace & Defense industry. The net income has significantly decreased by 29.2% when compared to the same quarter one year ago, falling from $1.11 million to $0.78 million.

You can view the full analysis from the report here: Innovative Solutions and Support Ratings Report

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