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 up 0.6% versus the S&P 500, which was up 0.1%. Laggards within the Electronics industry included LightPath Technologies ( LPTH), down 2.0%, Digital Power ( DPW), down 5.1%, Transcat ( TRNS), down 1.6%, Pulse Electronics ( PULS), down 6.8% and Sypris Solutions ( SYPR), down 3.8%.

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 $0.16 (6.8%) to $2.21 on heavy volume. Throughout the day, 114,352 shares of Pulse Electronics exchanged hands as compared to its average daily volume of 73,500 shares. The stock ranged in price between $2.21-$2.45 after having opened the day at $2.36 as compared to the previous trading day's close of $2.37.

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 $41.6 million and is part of the health care sector. Shares are down 18.0% year-to-date as of the close of trading on Tuesday.

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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 49.3% when compared to the same quarter one year ago, falling from -$5.23 million to -$7.81 million.
  • The gross profit margin for PULSE ELECTRONICS CORP is rather low; currently it is at 23.05%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.34% 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 32.84%, 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.
  • PULSE ELECTRONICS CORP has improved earnings per share by 30.8% 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.
  • Net operating cash flow has significantly increased by 187.37% to $6.65 million when compared to the same quarter last year. In addition, PULSE ELECTRONICS CORP has also vastly surpassed the industry average cash flow growth rate of -20.49%.

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

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At the close, Transcat ( TRNS) was down $0.15 (1.6%) to $8.95 on average volume. Throughout the day, 14,661 shares of Transcat exchanged hands as compared to its average daily volume of 17,100 shares. The stock ranged in price between $8.86-$9.38 after having opened the day at $9.02 as compared to the previous trading day's close of $9.10.

Transcat, Inc. provides calibration, repair, inspection, and compliance services in the United States, Canada, and internationally. The company also distributes professional grade handheld test, measurement, and control instrumentation. Transcat has a market cap of $61.8 million and is part of the health care sector. Shares are up 13.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Transcat as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on TRNS go as follows:

  • TRNS's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for TRANSCAT INC is currently lower than what is desirable, coming in at 25.05%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.52% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.41 million or 378.01% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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

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LightPath Technologies ( LPTH) was another company that pushed the Electronics industry lower today. LightPath Technologies was down $0.03 (2.0%) to $1.45 on average volume. Throughout the day, 47,814 shares of LightPath Technologies exchanged hands as compared to its average daily volume of 45,900 shares. The stock ranged in price between $1.40-$1.48 after having opened the day at $1.46 as compared to the previous trading day's close of $1.48.

LightPath Technologies, Inc. designs, develops, manufactures, and distributes optical components and assemblies. LightPath Technologies has a market cap of $19.3 million and is part of the health care sector. Shares are up 8.8% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates LightPath Technologies a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates LightPath Technologies 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 LPTH go as follows:

  • 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, LIGHTPATH TECHNOLOGIES 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 $0.04 million or 93.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • LPTH has underperformed the S&P 500 Index, declining 20.65% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • LPTH, with its decline in revenue, slightly underperformed the industry average of 3.6%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 47.32% is the gross profit margin for LIGHTPATH TECHNOLOGIES INC which we consider to be strong. Regardless of LPTH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.31% trails the industry average.

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

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