Why Arotech (ARTX) Hit a One-Year High Today

NEW YORK (TheStreet) -- Arotech  (ARTX) hit a one-year high of $5.92 as of 12:35 p.m. on Monday as the company, which manufactures and designs products for military and security markets, continued its surge from late last week.

On Thursday, the company reported a successful lab test of an iron flow battery for grid power storage. This new technology should help store grid power generated by renewable energy sources, and Arotech believes the technology could significantly reduce costs, improve performance and potentially increase efficiency to power grids that use environmentally-friendly renewable resources.

"We are very pleased with the results from lab tests on this new technology, which opens a huge new market for us," Chairman and CEO Robert S. Ehrlich said in a press release. "While flow batteries themselves are not new technologies, with over fifty flow batteries installed globally as at the end of last year, our design uses a patent-pending iron chemistry providing the highest ROI, with the lowest total lifecycle, capital and maintenance costs."

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TheStreet Ratings team rates AROTECH CORP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate AROTECH CORP (ARTX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ARTX's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ARTX's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
  • 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. In comparison to the other companies in the Aerospace & Defense industry and the overall market, AROTECH CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for AROTECH CORP is currently lower than what is desirable, coming in at 28.70%. Regardless of ARTX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.71% trails the industry average.
  • You can view the full analysis from the report here: ARTX Ratings Report

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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.

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