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 1.4% versus the S&P 500, which was down 1.1%. Laggards within the Industrial industry included Bonso Electronics International ( BNSO), down 3.2%, Servotronics ( SVT), down 3.5%, LGL Group ( LGL), down 8.2%, American DG Energy ( ADGE), down 6.9% and THT Heat Transfer Technology ( THTI), down 4.6%.

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

Colfax ( CFX) is one of the companies that pushed the Industrial industry lower today. Colfax was down $4.09 (5.6%) to $68.61 on heavy volume. Throughout the day, 2,320,975 shares of Colfax exchanged hands as compared to its average daily volume of 491,500 shares. The stock ranged in price between $65.72-$69.80 after having opened the day at $65.76 as compared to the previous trading day's close of $72.70.

Colfax Corporation, a diversified industrial manufacturing and engineering company, provides gas-and fluid-handling and fabrication technology products and services to commercial and governmental customers worldwide. Colfax has a market cap of $9.0 billion and is part of the industrial goods sector. Shares are up 13.8% year-to-date as of the close of trading on Wednesday. Currently there are 4 analysts who rate Colfax a buy, no analysts rate it a sell, and 8 rate it a hold.

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TheStreet Ratings rates Colfax 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, compelling growth in net income, growth in earnings per share 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 CFX go as follows:

  • The revenue growth came in higher than the industry average of 6.2%. Since the same quarter one year prior, revenues rose by 11.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
  • 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 69.3% when compared to the same quarter one year prior, rising from $27.64 million to $46.79 million.
  • COLFAX CORP's earnings per share improvement from the most recent quarter was slightly positive. 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, COLFAX CORP turned its bottom line around by earning $1.52 versus -$1.09 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $1.52).
  • 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 40.42% 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.

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

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At the close, THT Heat Transfer Technology ( THTI) was down $0.06 (4.6%) to $1.24 on light volume. Throughout the day, 11,603 shares of THT Heat Transfer Technology exchanged hands as compared to its average daily volume of 57,000 shares. The stock ranged in price between $1.22-$1.30 after having opened the day at $1.30 as compared to the previous trading day's close of $1.30.

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 $28.4 million and is part of the industrial goods sector. Shares are up 48.0% year-to-date as of the close of trading on Wednesday.

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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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LGL Group ( LGL) was another company that pushed the Industrial industry lower today. LGL Group was down $0.42 (8.2%) to $4.72 on light volume. Throughout the day, 300 shares of LGL Group exchanged hands as compared to its average daily volume of 7,000 shares. The stock ranged in price between $4.71-$4.73 after having opened the day at $4.71 as compared to the previous trading day's close of $5.14.

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 $13.2 million and is part of the industrial goods sector. Shares are down 5.9% year-to-date as of the close of trading on Wednesday.

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 generally disappointing historical performance in the stock itself.

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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 874.7% when compared to the same quarter one year ago, falling from -$0.08 million to -$0.81 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 29.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -13.19% is significantly below that of the industry average.
  • The share price of LGL GROUP INC has not done very well: it is down 18.44% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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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