3 Stocks Advancing The Aerospace/Defense Industry

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All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 30 points (0.2%) at 17,107 as of Tuesday, Aug. 26, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,006 issues advancing vs. 1,020 declining with 179 unchanged.

The Aerospace/Defense industry as a whole closed the day up 0.3% versus the S&P 500, which was up 0.1%. Top gainers within the Aerospace/Defense industry included Sifco Industries ( SIF), up 1.8%, Acorn Energy ( ACFN), up 2.1%, Elbit Systems ( ESLT), up 2.6% and Ducommun ( DCO), up 4.3%.

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

Ducommun ( DCO) is one of the companies that pushed the Aerospace/Defense industry higher today. Ducommun was up $1.29 (4.3%) to $31.33 on heavy volume. Throughout the day, 115,840 shares of Ducommun exchanged hands as compared to its average daily volume of 63,900 shares. The stock ranged in a price between $30.16-$31.70 after having opened the day at $30.38 as compared to the previous trading day's close of $30.04.

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 $327.6 million and is part of the industrial goods sector. Shares are up 0.8% year-to-date as of the close of trading on Monday. Currently there are 3 analysts who rate Ducommun a buy, no analysts rate it a sell, and 1 rates it a hold.

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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 growth in earnings per share. 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 -19.68%.
  • DUCOMMUN INC has improved earnings per share by 15.7% 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, DUCOMMUN INC reported lower earnings of $0.86 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $0.86).
  • 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

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