3 Stocks Advancing The Aerospace/Defense Industry

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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 89 points (0.5%) at 16,650 as of Wednesday, Aug. 13, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,238 issues advancing vs. 759 declining with 137 unchanged.

The Aerospace/Defense industry as a whole closed the day up 0.9% versus the S&P 500, which was up 0.6%. Top gainers within the Aerospace/Defense industry included CPI Aerostructures ( CVU), up 2.0%, Ducommun ( DCO), up 3.7%, Frontline ( FRO), up 4.7%, Astronics ( ATRO), up 2.8% and Taser International ( TASR), up 3.1%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Frontline ( FRO) is one of the companies that pushed the Aerospace/Defense industry higher today. Frontline was up $0.11 (4.7%) to $2.44 on light volume. Throughout the day, 408,943 shares of Frontline exchanged hands as compared to its average daily volume of 919,900 shares. The stock ranged in a price between $2.34-$2.51 after having opened the day at $2.34 as compared to the previous trading day's close of $2.33.

Frontline Ltd., through its subsidiaries, is engaged in the ownership and operation of oil tankers and oil/bulk/ore carriers. The company provides seaborne transportation of crude oil and oil products, as well as raw materials, such as coal and iron ore. Frontline has a market cap of $221.5 million and is part of the industrial goods sector. Shares are down 37.7% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Frontline a buy, 1 analyst rates it a sell, and 3 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 Frontline as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from TheStreet Ratings analysis on FRO 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 Oil, Gas & Consumable Fuels industry and the overall market, FRONTLINE LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for FRONTLINE LTD is currently lower than what is desirable, coming in at 31.31%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, FRO's net profit margin of -7.10% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 1231.27 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, FRO's quick ratio is somewhat strong at 1.36, demonstrating the ability to handle short-term liquidity needs.
  • FRO has underperformed the S&P 500 Index, declining 7.82% 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.
  • FRONTLINE LTD has improved earnings per share by 43.5% 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, FRONTLINE LTD reported poor results of -$2.38 versus -$0.91 in the prior year. This year, the market expects an improvement in earnings (-$0.65 versus -$2.38).

You can view the full analysis from the report here: Frontline 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, Ducommun ( DCO) was up $1.13 (3.7%) to $31.78 on average volume. Throughout the day, 61,808 shares of Ducommun exchanged hands as compared to its average daily volume of 59,400 shares. The stock ranged in a price between $30.73-$31.97 after having opened the day at $30.94 as compared to the previous trading day's close of $30.65.

Ducommun Incorporated provides engineering and manufacturing products and services primarily to the aerospace, defense, industrial, natural resources, medical, and other industries. It operates through two segments, Ducommun LaBarge Technologies (DLT) and Ducommun Aerostructures (DAS). Ducommun has a market cap of $335.5 million and is part of the industrial goods sector. Shares are up 2.8% year-to-date as of the close of trading on Tuesday. Currently there are 4 analysts who rate Ducommun a buy, no analysts rate it a sell, and none 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 Ducommun as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and poor profit margins.

Highlights from TheStreet Ratings analysis on DCO go as follows:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 17.6% when compared to the same quarter one year prior, going from $5.50 million to $6.47 million.
  • Net operating cash flow has significantly increased by 93.18% to $25.24 million when compared to the same quarter last year. In addition, DUCOMMUN INC has also vastly surpassed the industry average cash flow growth rate of -24.79%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, DCO's quick ratio is somewhat strong at 1.46, demonstrating the ability to handle short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Aerospace & Defense industry and the overall market, DUCOMMUN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

You can view the full analysis from the report here: Ducommun 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.

CPI Aerostructures ( CVU) was another company that pushed the Aerospace/Defense industry higher today. CPI Aerostructures was up $0.22 (2.0%) to $11.13 on average volume. Throughout the day, 22,030 shares of CPI Aerostructures exchanged hands as compared to its average daily volume of 20,400 shares. The stock ranged in a price between $10.52-$11.25 after having opened the day at $10.67 as compared to the previous trading day's close of $10.91.

CPI Aerostructures, Inc. is engaged in the contract production of structural aircraft parts for fixed wing aircraft and helicopters in the commercial and defense markets. CPI Aerostructures has a market cap of $90.5 million and is part of the industrial goods sector. Shares are down 27.5% year-to-date as of the close of trading on Tuesday. Currently there are 2 analysts who rate CPI Aerostructures a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates CPI Aerostructures 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, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on CVU go as follows:

  • CPI AEROSTRUCTURES 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, CPI AEROSTRUCTURES INC reported lower earnings of $0.92 versus $1.39 in the prior year. For the next year, the market is expecting a contraction of 8.7% in earnings ($0.84 versus $0.92).
  • 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 1763.4% when compared to the same quarter one year ago, falling from $1.79 million to -$29.69 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, CPI AEROSTRUCTURES INC'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 -$0.76 million or 166.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, CVU 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. 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: CPI Aerostructures 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.

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.

More from Markets

J.C. Penney Shares Fall as CEO Marvin Ellison Resigns to Head Lowe's

J.C. Penney Shares Fall as CEO Marvin Ellison Resigns to Head Lowe's

Stocks Extend Gains Amid Progress on U.S.-China Trade

Stocks Extend Gains Amid Progress on U.S.-China Trade

U.S. Crude Oil Hits Fresh 3-Year Highs as Gas Prices March to $3 a Gallon

U.S. Crude Oil Hits Fresh 3-Year Highs as Gas Prices March to $3 a Gallon

Micron Spikes After $10 Billion Buyback Plan Caps Bullish Q3 Earnings Forecast

Micron Spikes After $10 Billion Buyback Plan Caps Bullish Q3 Earnings Forecast

Oil Prices, China Tariffs, Micron and Kohl's - 5 Things You Must Know

Oil Prices, China Tariffs, Micron and Kohl's - 5 Things You Must Know