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 Lime Energy ( LIME), down 2.7%, Avalon Holdings ( AWX), down 3.7%, Art's-Way Manufacturing ( ARTW), down 2.3%, American DG Energy ( ADGE), down 7.3% and Tecumseh Products ( TECUB), down 1.7%.

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

Textron ( TXT) is one of the companies that pushed the Industrial Goods sector lower today. Textron was down $0.70 (1.8%) to $37.62 on average volume. Throughout the day, 1,369,497 shares of Textron exchanged hands as compared to its average daily volume of 1,622,700 shares. The stock ranged in price between $37.54-$38.31 after having opened the day at $38.31 as compared to the previous trading day's close of $38.33.

Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. It operates through five segments: Cessna, Bell, Textron Systems, Industrial, and Finance. Textron has a market cap of $10.7 billion and is part of the aerospace/defense industry. Shares are up 4.3% year-to-date as of the close of trading on Thursday. Currently there are 5 analysts who rate Textron a buy, no analysts rate it a sell, and 5 rate it a hold.

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TheStreet Ratings rates Textron as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on TXT go as follows:

  • Net operating cash flow has significantly increased by 93.23% to -$27.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 44.19%.
  • Compared to its closing price of one year ago, TXT's share price has jumped by 48.98%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
  • TEXTRON INC's earnings per share declined by 22.5% 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, TEXTRON INC reported lower earnings of $1.75 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.75).
  • TXT, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for TEXTRON INC is rather low; currently it is at 20.65%. Regardless of TXT'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 2.98% trails the industry average.

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

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At the close, Art's-Way Manufacturing ( ARTW) was down $0.13 (2.3%) to $5.62 on average volume. Throughout the day, 5,123 shares of Art's-Way Manufacturing exchanged hands as compared to its average daily volume of 4,500 shares. The stock ranged in price between $5.60-$5.85 after having opened the day at $5.66 as compared to the previous trading day's close of $5.75.

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 $23.3 million and is part of the aerospace/defense industry. Shares are down 5.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Art's-Way Manufacturing as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from TheStreet Ratings analysis on ARTW go as follows:

  • ARTW's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
  • Net operating cash flow has significantly increased by 53.67% to -$0.62 million when compared to the same quarter last year. In addition, ARTS WAY MFG INC has also vastly surpassed the industry average cash flow growth rate of -3.24%.
  • The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.43 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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 55.3% in earnings ($0.17 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 50.9% when compared to the same quarter one year ago, falling from $0.52 million to $0.25 million.

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

Lime Energy ( LIME) was another company that pushed the Industrial Goods sector lower today. Lime Energy was down $0.07 (2.7%) to $2.50 on heavy volume. Throughout the day, 9,809 shares of Lime Energy exchanged hands as compared to its average daily volume of 6,300 shares. The stock ranged in price between $2.50-$2.68 after having opened the day at $2.59 as compared to the previous trading day's close of $2.57.

Lime Energy Co. is engaged in designing and implementing energy efficiency programs for utilities in the United States. Lime Energy has a market cap of $9.6 million and is part of the aerospace/defense industry. Shares are down 11.1% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Lime Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on LIME go as follows:

  • Net operating cash flow has significantly decreased to -$6.94 million or 339.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for LIME ENERGY CO is currently lower than what is desirable, coming in at 31.90%. Regardless of LIME's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LIME's net profit margin of -9.51% significantly underperformed when compared to the industry average.
  • LIME's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 48.62%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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. Compared to other companies in the Electrical Equipment industry and the overall market, LIME ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • LIME 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. Despite the fact that LIME's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.

You can view the full analysis from the report here: Lime Energy 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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