Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, microelectronic products manufacturer Aeroflex Holding (NYSE: ARX ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Aeroflex's business and see what CAPS investors are saying about the stock right now.
Aeroflex facts
| Headquarters (founded) | Plainview, N.Y. (1937) |
| Market Cap | $824.1 million |
| Industry | Electronic components |
| Trailing-12-Month Revenue | $728.4 million |
| Management | CEO Leonard Borow (since 2007) CFO John Adamovich, Jr. (since 2007) |
| Return on Equity (average, past 3 years) | (19.1%) |
| Cash/Debt | $57.5 million / $723.6 million |
| Competitors | Agilent Technologies (NYSE: A ) Avago Technologies (Nasdaq: AVGO ) Honeywell International (NYSE: HON ) |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 14% of the 28 members who have rated Aeroflex believe the stock will underperform the S&P 500 going forward. These bears include MajorBob04 and Jeffrey2012.
Earlier this week, MajorBob04 wrote that Aeroflex "will suffer as the economy slows down and government spending is cut back." Our CAPS member concludes: "Earnings were not good in the last quarter, and I wouldn't expect them to rebound in the near future."
Aeroflex even sports a rather worrisome debt-to-equity of 195%. That's much higher than that of competitors such as Agilent (51%), Avago (0.3%), and Honeywell (69%).
CAPS member Jeffrey2012 elaborates on the bear case:
The continued debate about ongoing fiscal contraction in the US means one thing: military spending is going to be hit. There is no way with military spending that has grown to about 50% of discretionary spending wont take a significant cut. Because of that, [Aeroflex] will also face growth reductions going forward. ...
Also, with the way the defense department procures from private contractors like [Aeroflex] means they will most certainly take a hit going forward with delayed contracts because there will be a new re prioritizing of spending for strategic reasons.
No good can be seen going forward even though it seems attractively priced. A current value trap that will suck in more investors for the forseeable future.
What do you think about Aeroflex, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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