NEW YORK (TheStreet) -- Shares of RADA Electronic Industries (RADA) spiked 70.89% to $2.89 after the company announced that Lockheed Martin Corp.'s (LMT) Space Systems segment selected its Multi-Mission Hemispheric Radar (MHR) to support internally funded high energy laser weapon system prototype testing.
The radar will be used by Lockheed Martin in combination with other sensors.
The MHR, an S-Band, Software-Defined, Pulse-Doppler, Active Electronically Scanned Array radar has sophisticated beam forming capabilities and advanced signal processing, provides multiple missions on each radar platform, and offers unprecedented performance-to-price ratio, according to RADA Electronic Industries.
It is compact and mobile, delivering ideal organic, tactical surveillance solutions for force and border protection applications such as counter rockets and mortars, counter unmanned aerial systems, ground moving target indicator, air surveillance, and more, the company added.
"We are very happy with Lockheed Martin's selection of our unique MHR, which is particularly suited for use with systems that counter rockets and mortars," RADA CEO Zvi Alon said.
RADA Electronic Industries is an Israel-based defense electronics contractor. The company specializes in the development, production, and sale of Tactical Land Radars for Force and Border Protection, Inertial Navigation Systems for air and land applications, and Avionics Systems and Upgrades.
The stock is trading on heavy volume today with more than 2.37 million shares changing hands by 10:35 a.m. in New York, compared to the average of 94,497.
Separately, TheStreet Ratings team rates RADA ELECTRONIC INDS as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate RADA ELECTRONIC INDS (RADA) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 2.64 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.
- The gross profit margin for RADA ELECTRONIC INDS is currently lower than what is desirable, coming in at 27.15%. Regardless of RADA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RADA's net profit margin of -4.23% significantly underperformed when compared to 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, RADA ELECTRONIC INDS's return on equity is below that of both the industry average and the S&P 500.
- 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- RADA ELECTRONIC INDS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, RADA ELECTRONIC INDS reported poor results of -$0.29 versus -$0.22 in the prior year.
- You can view the full analysis from the report here: RADA Ratings Report