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 0.4% versus the S&P 500, which was down 0.9%. Laggards within the Industrial Goods sector included Global-Tech Advanced Innovations ( GAI), down 5.8%, Art's-Way Manufacturing ( ARTW), down 2.6%, Lime Energy ( LIME), down 1.9%, Tel Instrument Electronics ( TIK), down 2.0% and Asia Pacific Wire & Cable ( APWC), down 3.6%.

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

Embraer S.A ( ERJ) is one of the companies that pushed the Industrial Goods sector lower today. Embraer S.A was down $1.19 (3.1%) to $37.13 on average volume. Throughout the day, 1,209,940 shares of Embraer S.A exchanged hands as compared to its average daily volume of 863,400 shares. The stock ranged in price between $36.97-$38.24 after having opened the day at $38.20 as compared to the previous trading day's close of $38.32.

Embraer S.A. develops, produces, and sells jet and turboprop aircrafts for civil and defense aviation markets in Brazil, North America, Latin America, the Asia Pacific, Europe, and internationally. Embraer S.A has a market cap of $7.1 billion and is part of the aerospace/defense industry. Shares are up 19.1% year-to-date as of the close of trading on Monday. Currently there are 5 analysts who rate Embraer S.A a buy, no analysts rate it a sell, and 4 rate it a hold.

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TheStreet Ratings rates Embraer S.A as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from TheStreet Ratings analysis on ERJ go as follows:

  • The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 14.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 268.7% when compared to the same quarter one year prior, rising from $30.00 million to $110.60 million.
  • Net operating cash flow has increased to -$300.40 million or 18.72% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.85%.
  • EMBRAER SA reported significant earnings per share improvement 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, EMBRAER SA reported lower earnings of $1.86 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.55 versus $1.86).

You can view the full analysis from the report here: Embraer S.A Ratings Report

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At the close, Lime Energy ( LIME) was down $0.04 (1.9%) to $2.07 on light volume. Throughout the day, 5,382 shares of Lime Energy exchanged hands as compared to its average daily volume of 10,000 shares. The stock ranged in price between $2.07-$2.23 after having opened the day at $2.17 as compared to the previous trading day's close of $2.11.

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 $8.2 million and is part of the aerospace/defense industry. Shares are down 23.9% year-to-date as of the close of trading on Monday.

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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.

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 65.44%, 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

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Art's-Way Manufacturing ( ARTW) was another company that pushed the Industrial Goods sector lower today. Art's-Way Manufacturing was down $0.15 (2.6%) to $5.51 on heavy volume. Throughout the day, 64,493 shares of Art's-Way Manufacturing exchanged hands as compared to its average daily volume of 3,200 shares. The stock ranged in price between $5.51-$5.90 after having opened the day at $5.66 as compared to the previous trading day's close of $5.66.

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 $23.1 million and is part of the aerospace/defense industry. Shares are down 6.4% year-to-date as of the close of trading on Monday.

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.

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Highlights from TheStreet Ratings analysis on ARTW go as follows:

  • ARTW's revenue growth has slightly outpaced the industry average of 4.7%. 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 -31.93%.
  • 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.

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