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 down 0.2%. Laggards within the Aerospace/Defense industry included Micronet Enertec Technologies ( MICT), down 4.4%, TAT Technologies ( TATT), down 1.7%, CAE ( CAE), down 1.8%, LMI Aerospace ( LMIA), down 2.0% and Erickson ( EAC), down 1.8%.

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

Erickson ( EAC) is one of the companies that pushed the Aerospace/Defense industry lower today. Erickson was down $0.24 (1.8%) to $13.35 on light volume. Throughout the day, 30,503 shares of Erickson exchanged hands as compared to its average daily volume of 46,000 shares. The stock ranged in price between $13.16-$13.54 after having opened the day at $13.47 as compared to the previous trading day's close of $13.59.

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 $174.4 million and is part of the industrial goods sector. Shares are down 34.6% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate Erickson a buy, no analysts rate it a sell, and 5 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 17.07% 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

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

At the close, LMI Aerospace ( LMIA) was down $0.30 (2.0%) to $14.48 on light volume. Throughout the day, 26,905 shares of LMI Aerospace exchanged hands as compared to its average daily volume of 40,900 shares. The stock ranged in price between $14.21-$14.90 after having opened the day at $14.71 as compared to the previous trading day's close of $14.78.

LMI Aerospace Inc. provides structural assemblies, kits and components, and design engineering services to the aerospace and defense markets in the United States. LMI Aerospace has a market cap of $188.0 million and is part of the industrial goods sector. Shares are up 0.3% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates LMI Aerospace a buy, no analysts rate it a sell, and 2 rate it a hold.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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

Highlights from TheStreet Ratings analysis on LMIA go as follows:

  • 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 124.1% when compared to the same quarter one year ago, falling from $1.84 million to -$0.44 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 Aerospace & Defense industry and the overall market, LMI AEROSPACE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LMI AEROSPACE INC is rather low; currently it is at 24.03%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.46% trails that of the industry average.
  • Currently the debt-to-equity ratio of 1.97 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, LMIA has managed to keep a strong quick ratio of 1.56, which demonstrates the ability to cover short-term cash needs.
  • The share price of LMI AEROSPACE INC has not done very well: it is down 23.99% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

You can view the full analysis from the report here: LMI Aerospace 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.

CAE ( CAE) was another company that pushed the Aerospace/Defense industry lower today. CAE was down $0.23 (1.8%) to $12.62 on light volume. Throughout the day, 15,123 shares of CAE exchanged hands as compared to its average daily volume of 29,600 shares. The stock ranged in price between $12.60-$12.78 after having opened the day at $12.78 as compared to the previous trading day's close of $12.85.

CAE Inc. provides simulation and modeling technologies, and integrated training services primarily to the civil aviation industry and defense forces worldwide. CAE has a market cap of $3.3 billion and is part of the industrial goods sector. Shares are up 0.9% year-to-date as of the close of trading on Monday. Currently there are 6 analysts who rate CAE a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates CAE 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, impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from TheStreet Ratings analysis on CAE go as follows:

  • CAE's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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.
  • CAE INC has improved earnings per share by 35.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, CAE INC increased its bottom line by earning $0.74 versus $0.53 in the prior 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 39.2% when compared to the same quarter one year prior, rising from $43.10 million to $60.00 million.
  • CAE's debt-to-equity ratio of 0.81 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.82 is weak.

You can view the full analysis from the report here: CAE 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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