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 0.3% versus the S&P 500, which was unchanged. Laggards within the Electronics industry included Forward Industries ( FORD), down 2.1%, Bel Fuse ( BELFA), down 2.4%, IEC Electronics ( IEC), down 2.6%, SMTC ( SMTX), down 3.0% and Luna Innovations ( LUNA), down 3.2%.

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

SMTC ( SMTX) is one of the companies that pushed the Electronics industry lower today. SMTC was down $0.05 (3.0%) to $1.63 on average volume. Throughout the day, 20,432 shares of SMTC exchanged hands as compared to its average daily volume of 23,500 shares. The stock ranged in price between $1.62-$1.67 after having opened the day at $1.62 as compared to the previous trading day's close of $1.68.

SMTC Corporation provides advanced electronics manufacturing services worldwide. SMTC has a market cap of $26.9 million and is part of the technology sector. Shares are down 5.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates SMTC 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, poor profit margins and generally high debt management risk.

Highlights from TheStreet Ratings analysis on SMTX go as follows:

  • SMTC CORP 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. During the past fiscal year, SMTC CORP swung to a loss, reporting -$0.73 versus $0.46 in the prior year.
  • 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 195.0% when compared to the same quarter one year ago, falling from $0.62 million to -$0.59 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 Electronic Equipment, Instruments & Components industry and the overall market, SMTC CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SMTC CORP is currently extremely low, coming in at 10.38%. Regardless of SMTX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SMTX's net profit margin of -1.05% significantly underperformed when compared to the industry average.
  • The share price of SMTC CORP has not done very well: it is down 15.69% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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: SMTC Ratings Report

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At the close, IEC Electronics ( IEC) was down $0.11 (2.6%) to $4.15 on average volume. Throughout the day, 8,808 shares of IEC Electronics exchanged hands as compared to its average daily volume of 9,000 shares. The stock ranged in price between $4.07-$4.21 after having opened the day at $4.07 as compared to the previous trading day's close of $4.26.

IEC Electronics Corp. provides electronic contract manufacturing services to advanced technology companies in the United States. IEC Electronics has a market cap of $44.0 million and is part of the technology sector. Shares are down 9.5% year-to-date as of the close of trading on Tuesday. Currently there are 2 analysts who rate IEC Electronics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates IEC Electronics as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins.

Highlights from TheStreet Ratings analysis on IEC go as follows:

  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, IEC maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for IEC ELECTRONICS CORP is currently extremely low, coming in at 14.01%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.24% is significantly below that of the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, IEC ELECTRONICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • IEC, with its decline in revenue, underperformed when compared the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 8.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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

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Bel Fuse ( BELFA) was another company that pushed the Electronics industry lower today. Bel Fuse was down $0.49 (2.4%) to $20.30 on heavy volume. Throughout the day, 35,794 shares of Bel Fuse exchanged hands as compared to its average daily volume of 1,300 shares. The stock ranged in price between $20.05-$20.96 after having opened the day at $20.93 as compared to the previous trading day's close of $20.79.

Bel Fuse Inc. designs, manufactures, and sells products used in the networking, telecommunication, high-speed data transmission, commercial aerospace, military, broadcasting, transportation, and consumer electronic industries worldwide. Bel Fuse has a market cap of $44.7 million and is part of the technology sector. Shares are down 14.5% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Bel Fuse as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.

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Highlights from TheStreet Ratings analysis on BELFA go as follows:

  • BELFA's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues leaped by 54.5%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has decreased to $6.24 million or 37.09% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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 Communications Equipment industry. The net income has significantly decreased by 79.6% when compared to the same quarter one year ago, falling from $7.38 million to $1.51 million.

You can view the full analysis from the report here: Bel Fuse 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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