NEW YORK ( TheStreet) -- Arotech Corporation (Nasdaq: ARTX) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- 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 2972.8% when compared to the same quarter one year ago, falling from $0.09 million to -$2.64 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Aerospace & Defense industry and the overall market, AROTECH CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AROTECH CORP is rather low; currently it is at 23.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.90% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$2.39 million or 357.47% 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 share price of AROTECH CORP has not done very well: it is down 5.17% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.