3 Stocks Pushing The Aerospace/Defense Industry Lower

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The Aerospace/Defense industry as a whole closed the day down 1.0% versus the S&P 500, which was unchanged. Laggards within the Aerospace/Defense industry included Moog ( MOG.B), down 1.5%, CPI Aerostructures ( CVU), down 4.0%, Erickson ( EAC), down 14.2%, Innovative Solutions and Support ( ISSC), down 2.2% and Ducommun ( DCO), down 4.0%.

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

Innovative Solutions and Support ( ISSC) is one of the companies that pushed the Aerospace/Defense industry lower today. Innovative Solutions and Support was down $0.17 (2.2%) to $7.66 on light volume. Throughout the day, 37,378 shares of Innovative Solutions and Support exchanged hands as compared to its average daily volume of 83,200 shares. The stock ranged in price between $7.58-$7.91 after having opened the day at $7.77 as compared to the previous trading day's close of $7.83.

Innovative Solutions and Support, Inc., a systems integrator, designs, manufactures, sells, and services flight guidance and cockpit display systems. Innovative Solutions and Support has a market cap of $126.1 million and is part of the services sector. Shares are up 7.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Innovative Solutions and Support as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on ISSC go as follows:

  • ISSC's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 52.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • ISSC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.84, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to -$0.59 million or 1.51% when compared to the same quarter last year. Despite an increase in cash flow, INNOVATIVE SOLTNS & SUPP INC's cash flow growth rate is still lower than the industry average growth rate of 43.95%.
  • INNOVATIVE SOLTNS & SUPP INC's earnings per share declined by 28.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, INNOVATIVE SOLTNS & SUPP INC reported lower earnings of $0.12 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.12).
  • 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 29.2% when compared to the same quarter one year ago, falling from $1.11 million to $0.78 million.

You can view the full analysis from the report here: Innovative Solutions and Support Ratings Report

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At the close, Erickson ( EAC) was down $2.65 (14.2%) to $16.00 on heavy volume. Throughout the day, 117,634 shares of Erickson exchanged hands as compared to its average daily volume of 33,000 shares. The stock ranged in price between $15.99-$18.64 after having opened the day at $18.49 as compared to the previous trading day's close of $18.65.

Erickson Incorporated provides aviation services to commercial and government customers. As of December 31, 2013, the company operated a fleet of 90 rotary-wing and fixed wing aircrafts, including a fleet of 20 heavy-lift Erickson S-64 aircranes. Erickson has a market cap of $224.4 million and is part of the services sector. Shares are down 10.3% year-to-date as of the close of trading on Tuesday. Currently there are 3 analysts who rate Erickson a buy, no analysts rate it a sell, and 4 rate it a hold.

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TheStreet Ratings rates Erickson as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on EAC go as follows:

  • The share price of ERICKSON INC has not done very well: it is down 18.48% 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. 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.
  • 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 524.5% when compared to the same quarter one year ago, falling from -$1.22 million to -$7.59 million.
  • The debt-to-equity ratio is very high at 2.45 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, EAC maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
  • 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 Aerospace & Defense industry and the overall market, ERICKSON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ERICKSON INC is rather low; currently it is at 21.88%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -10.23% is significantly below that of the industry average.

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

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CPI Aerostructures ( CVU) was another company that pushed the Aerospace/Defense industry lower today. CPI Aerostructures was down $0.51 (4.0%) to $12.11 on average volume. Throughout the day, 21,815 shares of CPI Aerostructures exchanged hands as compared to its average daily volume of 17,500 shares. The stock ranged in price between $12.03-$12.69 after having opened the day at $12.69 as compared to the previous trading day's close of $12.62.

CPI Aerostructures, Inc. is engaged in the contract production of structural aircraft parts for fixed wing aircraft and helicopters in the commercial and defense markets. CPI Aerostructures has a market cap of $107.2 million and is part of the services sector. Shares are down 16.1% year-to-date as of the close of trading on Tuesday. Currently there are 3 analysts who rate CPI Aerostructures a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates CPI Aerostructures as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and feeble growth in the company's earnings per share.

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Highlights from TheStreet Ratings analysis on CVU go as follows:

  • CVU's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 9.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the Aerospace & Defense industry average, but is less than that of the S&P 500. The net income increased by 3.5% when compared to the same quarter one year prior, going from $1.67 million to $1.73 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. In comparison to the other companies in the Aerospace & Defense industry and the overall market, CPI AEROSTRUCTURES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to -$8.69 million or 18.33% 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: CPI Aerostructures 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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