3 Stocks Pushing The Electronics 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 Electronics industry as a whole closed the day down 1.0% versus the S&P 500, which was down 0.2%. Laggards within the Electronics industry included Qualstar ( QBAK), down 8.1%, Nortech Systems ( NSYS), down 2.2%, Aetrium ( ATRM), down 2.1%, Pulse Electronics ( PULS), down 7.2% and BTU International ( BTUI), down 2.7%.

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

Pulse Electronics ( PULS) is one of the companies that pushed the Electronics industry lower today. Pulse Electronics was down $0.18 (7.2%) to $2.32 on light volume. Throughout the day, 9,252 shares of Pulse Electronics exchanged hands as compared to its average daily volume of 15,800 shares. The stock ranged in price between $2.32-$2.62 after having opened the day at $2.62 as compared to the previous trading day's close of $2.50.

Pulse Electronics Corporation produces and sells precision-engineered electronic components and modules. It operates in three segments: Network, Power, and Wireless. Pulse Electronics has a market cap of $39.5 million and is part of the technology sector. Shares are down 13.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Pulse Electronics as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on PULS 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 27.1% when compared to the same quarter one year ago, falling from -$7.12 million to -$9.05 million.
  • The gross profit margin for PULSE ELECTRONICS CORP is rather low; currently it is at 23.67%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.07% is significantly below that of the industry average.
  • PULS'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 50.23%, 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.
  • PULS, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • PULSE ELECTRONICS CORP has improved earnings per share by 20.0% 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, PULSE ELECTRONICS CORP continued to lose money by earning -$3.39 versus -$6.60 in the prior year.

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

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At the close, Aetrium ( ATRM) was down $0.12 (2.1%) to $5.30 on light volume. Throughout the day, 3,500 shares of Aetrium exchanged hands as compared to its average daily volume of 7,300 shares. The stock ranged in price between $5.13-$5.54 after having opened the day at $5.50 as compared to the previous trading day's close of $5.41.

Aetrium Incorporated designs, manufactures, and markets various electromechanical equipment used in handling and testing integrated circuits (ICs). Aetrium has a market cap of $5.9 million and is part of the technology sector. Shares are down 19.0% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Aetrium as a sell. The area that we feel has been the company's primary weakness has been its disappointing return on equity.

Highlights from TheStreet Ratings analysis on ATRM go as follows:

  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, AETRIUM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 40.64% is the gross profit margin for AETRIUM INC which we consider to be strong. Regardless of ATRM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATRM's net profit margin of -9.08% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly increased by 150.03% to $0.64 million when compared to the same quarter last year. In addition, AETRIUM INC has also vastly surpassed the industry average cash flow growth rate of -11.39%.
  • ATRM's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.34, which clearly demonstrates the ability to cover short-term cash needs.
  • This stock has increased by 31.89% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in ATRM do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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

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Qualstar ( QBAK) was another company that pushed the Electronics industry lower today. Qualstar was down $0.10 (8.1%) to $1.13 on average volume. Throughout the day, 13,652 shares of Qualstar exchanged hands as compared to its average daily volume of 11,200 shares. The stock ranged in price between $1.13-$1.25 after having opened the day at $1.16 as compared to the previous trading day's close of $1.23.

Qualstar Corporation designs, develops, manufactures, and sells power supplies and data storage systems worldwide. The company operates in two segments, Power Supplies and Tape Libraries. Qualstar has a market cap of $14.5 million and is part of the technology sector. Shares are up 8.8% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Qualstar as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on QBAK go as follows:

  • 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 Computers & Peripherals industry and the overall market, QUALSTAR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.61 million or 191.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • QBAK has underperformed the S&P 500 Index, declining 15.39% from its price level of one year ago. 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.
  • QUALSTAR CORP has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, QUALSTAR CORP reported poor results of -$0.85 versus -$0.35 in the prior year.
  • The revenue fell significantly faster than the industry average of 9.0%. Since the same quarter one year prior, revenues fell by 24.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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