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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 0.7% versus the S&P 500, which was up 0.2%. Laggards within the Aerospace/Defense industry included Acorn Energy ( ACFN), down 6.9%, Frontline ( FRO), down 2.6%, Hexcel ( HXL), down 4.1%, B/E Aerospace ( BEAV), down 3.3% and Boeing ( BA), down 2.3%.

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

Hexcel ( HXL) is one of the companies that pushed the Aerospace/Defense industry lower today. Hexcel was down $1.65 (4.1%) to $38.39 on heavy volume. Throughout the day, 2,026,871 shares of Hexcel exchanged hands as compared to its average daily volume of 735,300 shares. The stock ranged in price between $38.32-$39.76 after having opened the day at $39.52 as compared to the previous trading day's close of $40.04.

Hexcel Corporation, together with its subsidiaries, engages in the development, manufacture, and marketing of lightweight and high-performance structural materials for use in commercial aerospace, space and defense, and industrial applications. Hexcel has a market cap of $4.0 billion and is part of the industrial goods sector. Shares are down 10.4% year-to-date as of the close of trading on Tuesday. Currently there are 7 analysts who rate Hexcel a buy, 1 analyst rates it a sell, and 2 rate it a hold.

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TheStreet Ratings rates Hexcel as a buy. 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, impressive record of earnings per share growth, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from TheStreet Ratings analysis on HXL go as follows:

  • HXL's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
  • HEXCEL CORP has improved earnings per share by 16.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HEXCEL CORP increased its bottom line by earning $1.85 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($2.13 versus $1.85).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 14.9% when compared to the same quarter one year prior, going from $43.60 million to $50.10 million.
  • 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, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

You can view the full analysis from the report here: Hexcel 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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