3 Stocks Pushing The Industrial Industry 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 industry as a whole closed the day down 0.2% versus the S&P 500, which was unchanged. Laggards within the Industrial industry included Global-Tech Advanced Innovations ( GAI), down 3.7%, Ultralife Batteries ( ULBI), down 1.8%, American DG Energy ( ADGE), down 12.8%, Tecumseh Products ( TECUB), down 2.1% and THT Heat Transfer Technology ( THTI), down 1.6%.

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

Tennant ( TNC) is one of the companies that pushed the Industrial industry lower today. Tennant was down $1.33 (1.8%) to $74.57 on average volume. Throughout the day, 64,801 shares of Tennant exchanged hands as compared to its average daily volume of 77,400 shares. The stock ranged in price between $74.32-$76.41 after having opened the day at $76.06 as compared to the previous trading day's close of $75.90.

Tennant Company designs, manufactures, and markets cleaning solutions worldwide. Tennant has a market cap of $1.4 billion and is part of the industrial goods sector. Shares are up 11.9% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates Tennant a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Tennant as a buy. 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, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on TNC go as follows:

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 9.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TNC's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TNC has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 59.74% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • TENNANT CO has improved earnings per share by 14.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TENNANT CO reported lower earnings of $2.14 versus $2.18 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $2.14).
  • The net income growth from the same quarter one year ago has exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income increased by 14.5% when compared to the same quarter one year prior, going from $5.06 million to $5.80 million.

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

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At the close, THT Heat Transfer Technology ( THTI) was down $0.02 (1.6%) to $1.22 on light volume. Throughout the day, 8,170 shares of THT Heat Transfer Technology exchanged hands as compared to its average daily volume of 60,000 shares. The stock ranged in price between $1.20-$1.23 after having opened the day at $1.22 as compared to the previous trading day's close of $1.24.

THT Heat Transfer Technology, Inc., through its subsidiaries, manufactures and trades in plate heat exchangers and various related products in the People's Republic of China. THT Heat Transfer Technology has a market cap of $25.6 million and is part of the industrial goods sector. Shares are up 32.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates THT Heat Transfer Technology as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from TheStreet Ratings analysis on THTI go as follows:

  • The gross profit margin for THT HEAT TRANSFER TECH INC is currently lower than what is desirable, coming in at 33.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.80% trails that of the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Machinery industry and the overall market, THT HEAT TRANSFER TECH INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • In its most recent trading session, THTI 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • THT HEAT TRANSFER TECH INC reported flat earnings per share in the most recent quarter. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, THT HEAT TRANSFER TECH INC's EPS of $0.15 remained unchanged from the prior years' EPS of $0.15.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 53.2% when compared to the same quarter one year prior, rising from $0.31 million to $0.48 million.

You can view the full analysis from the report here: THT Heat Transfer Technology Ratings Report

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Ultralife Batteries ( ULBI) was another company that pushed the Industrial industry lower today. Ultralife Batteries was down $0.07 (1.8%) to $3.78 on light volume. Throughout the day, 3,977 shares of Ultralife Batteries exchanged hands as compared to its average daily volume of 9,300 shares. The stock ranged in price between $3.78-$3.95 after having opened the day at $3.86 as compared to the previous trading day's close of $3.85.

Ultralife Corporation offers power and communications solutions in the United States and internationally. It operates through two segments, Battery & Energy Products and Communications Systems. Ultralife Batteries has a market cap of $67.3 million and is part of the industrial goods sector. Shares are up 8.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Ultralife Batteries as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from TheStreet Ratings analysis on ULBI go as follows:

  • ULBI 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 2.60, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 485.73% to $2.70 million when compared to the same quarter last year. In addition, ULTRALIFE CORP has also vastly surpassed the industry average cash flow growth rate of -7.28%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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. Compared to other companies in the Electrical Equipment industry and the overall market, ULTRALIFE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ULTRALIFE CORP is currently lower than what is desirable, coming in at 32.72%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.41% is significantly below that of the industry average.

You can view the full analysis from the report here: Ultralife Batteries 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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