Perilous Reversal Watch: Arotech Corporation (ARTX)

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.

Trade-Ideas LLC identified Arotech Corporation ( ARTX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Arotech Corporation as such a stock due to the following factors:

  • ARTX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.3 million.
  • ARTX has traded 866,249 shares today.
  • ARTX is down 14.6% today.
  • ARTX was up 6.9% yesterday.

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More details on ARTX:

Arotech Corporation, together with its subsidiaries, provides defense and security products. ARTX has a PE ratio of 24.8. Currently there are no analysts that rate Arotech Corporation a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Arotech Corporation has been 1.2 million shares per day over the past 30 days. Arotech has a market cap of $108.8 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 0.98 and a short float of 1.7% with 0.24 days to cover. Shares are up 66.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Arotech Corporation as a hold. 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 ratings report include:
  • ARTX's revenue growth has slightly outpaced the industry average of 7.2%. 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.

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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