NEW YORK (TheStreet) -- Shares of RADA Electronic Industries (RADA) - Get Report were gaining 17.8% to $3.05 on heavy trading volume Tuesday after the electronics company announced a new strategic agreement with DRS Technologies.
The goal of the new agreement is to bring RADA's tactical active electronically scanned array (AESA) radar technology to North America.
Under the agreement DRS Technologies will sell, produce, and support, tactical AESA radars as part of its tactical radar portfolio. RADA expects its technology and DRS' market presence, customer awareness, engineering, and production capabilities to produce "significant interest" in the North American defense industry market.
"We value the North American market as the most promising growth market for our tactical radars technology, and are confident that this agreement will facilitate the adoption of this technology and growth of our radars business," RADA CEO Zvi Alon said in a statement.
About 4.8 million shares of RADA were traded by 12:09 p.m. Tuesday, above the company's average trading volume of about 601,000 shares a day.
TheStreet Ratings team rates RADA ELECTRONIC INDS as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate RADA ELECTRONIC INDS (RADA) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 2.64 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.
- The gross profit margin for RADA ELECTRONIC INDS is currently lower than what is desirable, coming in at 27.15%. Regardless of RADA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RADA's net profit margin of -4.23% significantly underperformed when compared to the industry average.
- 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, RADA ELECTRONIC INDS's return on equity is below that of both the industry average and the S&P 500.
- This stock has increased by 65.98% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- RADA ELECTRONIC INDS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, RADA ELECTRONIC INDS reported poor results of -$0.29 versus -$0.22 in the prior year.
- You can view the full analysis from the report here: RADA Ratings Report