3 Aerospace/Defense Stocks Moving The Industry Upward

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 60 points (0.4%) at 17,039 as of Thursday, Aug. 21, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,834 issues advancing vs. 1,204 declining with 157 unchanged.

The Aerospace/Defense industry as a whole closed the day up 0.4% versus the S&P 500, which was up 0.3%. Top gainers within the Aerospace/Defense industry included Tel Instrument Electronics ( TIK), up 2.0%, Air Industries Group ( AIRI), up 1.8%, LMI Aerospace ( LMIA), up 2.9%, Astrotech ( ASTC), up 2.0% and Elbit Systems ( ESLT), up 1.5%.

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

Elbit Systems ( ESLT) is one of the companies that pushed the Aerospace/Defense industry higher today. Elbit Systems was up $0.89 (1.5%) to $58.85 on average volume. Throughout the day, 12,328 shares of Elbit Systems exchanged hands as compared to its average daily volume of 15,600 shares. The stock ranged in a price between $58.30-$59.00 after having opened the day at $58.30 as compared to the previous trading day's close of $57.96.

Elbit Systems Ltd., a defense electronics company, designs, develops, manufactures, and integrates defense electronic systems and products worldwide. Elbit Systems has a market cap of $2.5 billion and is part of the industrial goods sector. Shares are down 3.1% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate Elbit Systems a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Elbit Systems as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on ESLT go as follows:

  • Compared to its closing price of one year ago, ESLT's share price has jumped by 32.93%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ESLT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ELBIT SYSTEMS LTD's earnings per share declined by 10.4% 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, ELBIT SYSTEMS LTD increased its bottom line by earning $4.31 versus $3.98 in the prior year. This year, the market expects an improvement in earnings ($4.43 versus $4.31).
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
  • ESLT, with its decline in revenue, slightly underperformed the industry average of 1.3%. Since the same quarter one year prior, revenues slightly dropped by 0.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

You can view the full analysis from the report here: Elbit Systems 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 up $0.42 (2.9%) to $14.70 on average volume. Throughout the day, 42,779 shares of LMI Aerospace exchanged hands as compared to its average daily volume of 39,800 shares. The stock ranged in a price between $14.30-$14.75 after having opened the day at $14.33 as compared to the previous trading day's close of $14.28.

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 $188.1 million and is part of the industrial goods sector. Shares are down 3.1% year-to-date as of the close of trading on Wednesday. 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 feeble growth in its earnings per share.

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.
  • LMI AEROSPACE 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LMI AEROSPACE INC swung to a loss, reporting -$4.64 versus $1.40 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$4.64).

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.

Air Industries Group ( AIRI) was another company that pushed the Aerospace/Defense industry higher today. Air Industries Group was up $0.17 (1.8%) to $9.41 on heavy volume. Throughout the day, 29,759 shares of Air Industries Group exchanged hands as compared to its average daily volume of 15,800 shares. The stock ranged in a price between $8.80-$9.41 after having opened the day at $9.06 as compared to the previous trading day's close of $9.24.

Air Industries Group, an aerospace and defense company, designs and manufactures structural parts and assemblies that focus on flight safety. Air Industries Group has a market cap of $64.4 million and is part of the industrial goods sector. Shares are up 1.0% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Air Industries Group a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Air Industries Group as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on AIRI go as follows:

  • Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 54.48% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although AIRI had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • 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 172.6% when compared to the same quarter one year prior, rising from $0.23 million to $0.62 million.
  • AIRI, with its decline in revenue, underperformed when compared the industry average of 1.3%. Since the same quarter one year prior, revenues slightly dropped by 8.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • AIR INDUSTRIES GROUP INC reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AIR INDUSTRIES GROUP INC increased its bottom line by earning $0.64 versus $0.56 in the prior year. For the next year, the market is expecting a contraction of 53.1% in earnings ($0.30 versus $0.64).
  • The gross profit margin for AIR INDUSTRIES GROUP INC is currently lower than what is desirable, coming in at 25.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.61% trails that of the industry average.

You can view the full analysis from the report here: Air Industries 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.

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.

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