3 Stocks Pushing The Industrial Goods Sector Lower

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.

The Industrial Goods sector as a whole closed the day down 1.6% versus the S&P 500, which was down 0.5%. Laggards within the Industrial Goods sector included LGL Group ( LGL), down 2.7%, Avalon Holdings ( AWX), down 5.8%, Intelligent Systems ( INS), down 1.8%, Asia Pacific Wire & Cable ( APWC), down 1.8% and Art's-Way Manufacturing ( ARTW), down 1.6%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

Mohawk Industries ( MHK) is one of the companies that pushed the Industrial Goods sector lower today. Mohawk Industries was down $4.48 (3.2%) to $135.00 on light volume. Throughout the day, 727,787 shares of Mohawk Industries exchanged hands as compared to its average daily volume of 1,014,600 shares. The stock ranged in price between $134.78-$139.31 after having opened the day at $139.31 as compared to the previous trading day's close of $139.48.

Mohawk Industries, Inc., together with its subsidiaries, designs, manufactures, sources, distributes, and markets floor covering products for residential and commercial applications in both remodeling and new construction worldwide. Mohawk Industries has a market cap of $10.2 billion and is part of the consumer durables industry. Shares are down 6.3% year-to-date as of the close of trading on Tuesday. Currently there are 7 analysts who rate Mohawk Industries a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Mohawk Industries as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on MHK go as follows:

  • MHK's revenue growth has slightly outpaced the industry average of 19.0%. Since the same quarter one year prior, revenues rose by 21.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MOHAWK INDUSTRIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MOHAWK INDUSTRIES INC increased its bottom line by earning $5.05 versus $3.60 in the prior year. This year, the market expects an improvement in earnings ($8.26 versus $5.05).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 60.6% when compared to the same quarter one year prior, rising from $50.50 million to $81.08 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that MHK's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.

You can view the full analysis from the report here: Mohawk Industries Ratings Report

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At the close, Art's-Way Manufacturing ( ARTW) was down $0.10 (1.6%) to $5.99 on light volume. Throughout the day, 2,341 shares of Art's-Way Manufacturing exchanged hands as compared to its average daily volume of 6,600 shares. The stock ranged in price between $5.96-$6.00 after having opened the day at $6.00 as compared to the previous trading day's close of $6.09.

Art's-Way Manufacturing Co., Inc. manufactures and sells agricultural equipment, specialized modular science buildings, pressurized steel vessels, and steel cutting tools in the United States and internationally. Art's-Way Manufacturing has a market cap of $24.4 million and is part of the consumer durables industry. Shares are down 1.0% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Art's-Way Manufacturing as a hold.

Highlights from TheStreet Ratings analysis on ARTW go as follows:

  • ARTW, with its decline in revenue, underperformed when compared the industry average of 2.0%. Since the same quarter one year prior, revenues fell by 25.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, ARTW has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • ARTS WAY MFG INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ARTS WAY MFG INC reported lower earnings of $0.38 versus $0.66 in the prior year. For the next year, the market is expecting a contraction of 26.3% in earnings ($0.28 versus $0.38).
  • 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 Machinery industry. The net income has significantly decreased by 131.5% when compared to the same quarter one year ago, falling from $0.82 million to -$0.26 million.

You can view the full analysis from the report here: Art's-Way Manufacturing Ratings Report

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LGL Group ( LGL) was another company that pushed the Industrial Goods sector lower today. LGL Group was down $0.13 (2.7%) to $4.69 on average volume. Throughout the day, 4,243 shares of LGL Group exchanged hands as compared to its average daily volume of 4,600 shares. The stock ranged in price between $4.60-$4.70 after having opened the day at $4.70 as compared to the previous trading day's close of $4.82.

The LGL Group, Inc., through its subsidiaries, designs, manufactures, and markets standard and custom-engineered electronic components in the United States and internationally. LGL Group has a market cap of $12.3 million and is part of the consumer durables industry. Shares are down 12.2% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates LGL Group as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

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Highlights from TheStreet Ratings analysis on LGL go as follows:

  • LGL GROUP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, LGL GROUP INC reported poor results of -$3.16 versus -$0.51 in the prior year.
  • 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 896.5% when compared to the same quarter one year ago, falling from -$0.20 million to -$1.97 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, LGL GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LGL GROUP INC is currently lower than what is desirable, coming in at 26.45%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -34.37% is significantly below that of the industry average.
  • Net operating cash flow has decreased to -$0.60 million or 28.51% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: LGL Group Ratings Report

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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