3 Stocks Pushing The Aerospace/Defense Industry Lower

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The Aerospace/Defense industry as a whole closed the day down 0.8% versus the S&P 500, which was down 0.2%. Laggards within the Aerospace/Defense industry included Tel Instrument Electronics ( TIK), down 1.8%, Micronet Enertec Technologies ( MICT), down 2.8%, Breeze-Eastern ( BZC), down 1.7%, Sifco Industries ( SIF), down 1.9% and Acorn Energy ( ACFN), down 2.6%.

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

Orbital ( ORB) is one of the companies that pushed the Aerospace/Defense industry lower today. Orbital was down $0.52 (1.9%) to $26.96 on light volume. Throughout the day, 287,171 shares of Orbital exchanged hands as compared to its average daily volume of 388,600 shares. The stock ranged in price between $26.67-$27.50 after having opened the day at $27.24 as compared to the previous trading day's close of $27.48.

Orbital Sciences Corporation develops and manufactures small- and medium-class rockets and space systems for commercial, military, and civil government customers in the United States, Europe, Eurasia, Mexico, South America, and East Asia. Orbital has a market cap of $1.7 billion and is part of the industrial goods sector. Shares are up 17.9% year-to-date as of the close of trading on Wednesday. Currently there are 5 analysts who rate Orbital a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Orbital as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on ORB go as follows:

  • ORB's debt-to-equity ratio is very low at 0.17 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 2.99, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $24.46 million or 33.16% when compared to the same quarter last year. In addition, ORBITAL SCIENCES CORP has also vastly surpassed the industry average cash flow growth rate of -19.68%.
  • Compared to its closing price of one year ago, ORB's share price has jumped by 50.85%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Aerospace & Defense industry average. The net income increased by 1.6% when compared to the same quarter one year prior, going from $16.28 million to $16.53 million.
  • ORB, with its decline in revenue, slightly underperformed the industry average of 1.2%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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

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At the close, Acorn Energy ( ACFN) was down $0.05 (2.6%) to $1.89 on light volume. Throughout the day, 143,939 shares of Acorn Energy exchanged hands as compared to its average daily volume of 459,900 shares. The stock ranged in price between $1.84-$1.95 after having opened the day at $1.95 as compared to the previous trading day's close of $1.94.

Acorn Energy, Inc., through its subsidiaries, provides technology driven solutions for energy infrastructure asset management worldwide. It offers oil and gas sensor systems, a fiber optic sensing system for the energy, commercial security, and defense markets. Acorn Energy has a market cap of $43.5 million and is part of the industrial goods sector. Shares are down 52.3% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Acorn Energy a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Acorn Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on ACFN 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 Electronic Equipment, Instruments & Components industry and the overall market, ACORN ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ACORN ENERGY INC is currently lower than what is desirable, coming in at 34.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -96.63% is significantly below that of the industry average.
  • ACFN'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 68.33%, 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.
  • The revenue fell significantly faster than the industry average of 8.8%. Since the same quarter one year prior, revenues fell by 22.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ACORN ENERGY INC has improved earnings per share by 32.1% 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, ACORN ENERGY INC reported poor results of -$1.60 versus -$0.94 in the prior year. This year, the market expects an improvement in earnings (-$0.68 versus -$1.60).

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

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Breeze-Eastern ( BZC) was another company that pushed the Aerospace/Defense industry lower today. Breeze-Eastern was down $0.18 (1.7%) to $10.06 on light volume. Throughout the day, 3,798 shares of Breeze-Eastern exchanged hands as compared to its average daily volume of 16,200 shares. The stock ranged in price between $10.06-$10.37 after having opened the day at $10.06 as compared to the previous trading day's close of $10.24.

Breeze-Eastern Corporation designs, develops, manufactures, sells, and services engineered mission equipment for specialty aerospace and defense applications. Breeze-Eastern has a market cap of $99.0 million and is part of the industrial goods sector. Shares are up 11.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Breeze-Eastern as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, 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 deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from TheStreet Ratings analysis on BZC go as follows:

  • BZC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, BZC has a quick ratio of 2.07, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 6375.60% to $2.66 million when compared to the same quarter last year. In addition, BREEZE-EASTERN CORP has also vastly surpassed the industry average cash flow growth rate of -19.68%.
  • BZC, with its decline in revenue, slightly underperformed the industry average of 1.2%. Since the same quarter one year prior, revenues slightly dropped by 8.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Aerospace & Defense industry and the overall market, BREEZE-EASTERN CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for BREEZE-EASTERN CORP is currently lower than what is desirable, coming in at 33.01%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.90% trails that of the industry average.

You can view the full analysis from the report here: Breeze-Eastern 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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