NasdaqGM:ARTX

Stock Analysis Report

Executive Summary

Arotech Corporation provides defense and security products worldwide.

Rewards

Trading at 88.2% below its fair value

Earnings are forecast to grow 163.04% per year

Risk Analysis

The company is scheduled for de-listing

Highly volatile share price over past 3 months

Does not have a meaningful market cap ($79M)



Snowflake Analysis

Adequate balance sheet with reasonable growth potential.


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Share Price & News

How has Arotech's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARTX's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.2%

ARTX

-0.1%

US Aerospace & Defense

1.5%

US Market


1 Year Return

15.6%

ARTX

25.8%

US Aerospace & Defense

20.1%

US Market

Return vs Industry: ARTX underperformed the US Aerospace & Defense industry which returned 37.9% over the past year.

Return vs Market: ARTX underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

ARTXIndustryMarket
7 Day0.2%-0.1%1.5%
30 Day0.2%1.6%1.4%
90 Day32.5%6.1%8.7%
1 Year15.6%15.6%28.1%25.8%22.7%20.1%
3 Year-14.4%-14.4%54.6%46.4%50.1%40.5%
5 Year31.4%31.4%91.9%73.7%73.1%54.1%

Price Volatility Vs. Market

How volatile is Arotech's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Arotech undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ARTX ($3) is trading below our estimate of fair value ($25.47)

Significantly Below Fair Value: ARTX is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ARTX is unprofitable, so we can't compare its PE Ratio to the Aerospace & Defense industry average.

PE vs Market: ARTX is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate ARTX's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: ARTX is good value based on its PB Ratio (1x) compared to the US Aerospace & Defense industry average (2.7x).


Next Steps

Future Growth

How is Arotech forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

163.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARTX is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.7%).

Earnings vs Market: ARTX is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: ARTX's is expected to become profitable in the next 3 years.

Revenue vs Market: ARTX's revenue (16% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: ARTX's revenue (16% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if ARTX's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Arotech performed over the past 5 years?

21.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARTX is currently unprofitable.

Growing Profit Margin: ARTX is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: ARTX is unprofitable, but has reduced losses over the past 5 years at a rate of 21.6% per year.

Accelerating Growth: Unable to compare ARTX's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: ARTX is unprofitable, making it difficult to compare its past year earnings growth to the Aerospace & Defense industry (13.9%).


Return on Equity

High ROE: ARTX has a negative Return on Equity (-0.83%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arotech's financial position?


Financial Position Analysis

Short Term Liabilities: ARTX's short term assets ($60.0M) exceed its short term liabilities ($35.6M).

Long Term Liabilities: ARTX's short term assets ($60.0M) exceed its long term liabilities ($19.4M).


Debt to Equity History and Analysis

Debt Level: ARTX's debt to equity ratio (25.2%) is considered satisfactory.

Reducing Debt: ARTX's debt to equity ratio has reduced from 38.6% to 25.2% over the past 5 years.


Balance Sheet

Inventory Level: ARTX has a low level of unsold assets or inventory.

Debt Coverage by Assets: ARTX's debt is covered by short term assets (assets are 3.1x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: ARTX has been profitable on average in the past, therefore cash runway is not a concern.

Forecast Cash Runway: ARTX has been profitable on average in the past, therefore cash runway is not a concern.


Next Steps

Dividend

What is Arotech's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.7%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate ARTX's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate ARTX's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ARTX's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ARTX's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ARTX's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.0yrs

Average management tenure


CEO

Dean Krutty (54yo)

2.9yrs

Tenure

US$639,050

Compensation

Mr. Dean M. Krutty has been President and Chief Executive Officer of Arotech Corporation since March 14, 2018 and served as its Acting Chief Executive Officer since January 3, 2017 until March 14, 2018. Mr ...


CEO Compensation Analysis

Compensation vs Market: Dean's total compensation ($USD639.05K) is about average for companies of similar size in the US market ($USD519.76K).

Compensation vs Earnings: Dean's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Dean Krutty
President & CEO2.9yrsUS$639.05k0.65% $516.1k
Kelli Kellar
VP of Finance & CFO1.7yrsUS$485.76k0.076% $60.0k
Yaakov Har-Oz
Senior VP19.2yrsno datano data
Kurt Flosky
President of Training & Simulation Division4.9yrsno datano data
David Modeen
President of UEC Electrnoics3yrsno datano data

3.0yrs

Average Tenure

54yo

Average Age

Experienced Management: ARTX's management team is considered experienced (3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Jon Kutler
Chairman of the Board3.6yrsUS$67.00k1.17% $922.2k
Lawrence Hagenbuch
Independent Director3.8yrsUS$68.00k0.24% $190.9k
Kenneth Cappell
Independent Director4.6yrsUS$75.00k0.52% $412.3k
James Quinn
Independent Director3.6yrsUS$71.00k0.16% $125.6k

3.7yrs

Average Tenure

64yo

Average Age

Experienced Board: ARTX's board of directors are considered experienced (3.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Arotech Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Arotech Corporation
  • Ticker: ARTX
  • Exchange: NasdaqGM
  • Founded: 1990
  • Industry: Aerospace and Defense
  • Sector: Capital Goods
  • Market Cap: US$79.001m
  • Shares outstanding: 26.38m
  • Website: https://www.arotech.com

Number of Employees


Location

  • Arotech Corporation
  • 1229 Oak Valley Drive
  • Ann Arbor
  • Michigan
  • 48108
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ARTXNasdaqGM (Nasdaq Global Market)YesCommon StockUSUSDFeb 1994
EL5ADB (Deutsche Boerse AG)YesCommon StockDEEURFeb 1994
0HHYLSE (London Stock Exchange)YesCommon StockGBUSDFeb 1994

Biography

Arotech Corporation provides defense and security products worldwide. The company’s Training and Simulation division develops, manufactures, and markets multimedia and interactive digital solutions for engineering, use-of-force training, and operator training of military, law enforcement, security, emergency services, and other personnel. This division offers simulators, systems engineering support, and software products for training vehicle operators to the United States military, government, municipalities, and private industry; weapon simulations used to train military pilots, weapon employment information used in air launched weapons, and part-task simulators to train aircrew; specialized use-of-force training simulators and systems for police, security personnel, and the military under the MILO Range trade name; and consulting and development support services under the Realtime Technologies trade name. Its Power Systems division provides electronics engineering and design, system integration, rapid prototyping, and vertically production services for military, aerospace, and industrial customers, including hybrid power generation systems, smart power subsystems for military vehicles and dismounted applications, and aircraft and missile systems support for weapons and communications technologies. This division also develops and sells rechargeable and primary batteries, and smart chargers to the military and medical markets, and to private defense industry under the Epsilor name. In addition, it develops, manufactures, and markets primary batteries, rechargeable batteries, and battery chargers for the military; and produces water-activated lifejacket lights for commercial aviation and marine applications under the Electric Fuel name. The company was formerly known as Electric Fuel Corporation and changed its name to Arotech Corporation in September 2003. The company was incorporated in 1990 and is based in Ann Arbor, Michigan. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/19 23:36
End of Day Share Price2019/12/18 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.