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 poor profit margins and weak operating cash flow.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- The gross profit margin for AROTECH CORP is currently lower than what is desirable, coming in at 25.26%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.83% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$1.77 million or 400.56% 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 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. 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 current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
- This stock has increased by 51.00% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in ARTX do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.