We reiterate our Outperform recommendation on aerospace and
Alliant Techsystems Inc.
). The company registered favourable top-and bottom-line results
in the second quarter of fiscal 2013 with both lines beating the
Zacks Consensus Estimates.
We believe the company's tall booking orders and large-scale
contract wins in the aerospace, defense and sporting segment will
certainly set the momentum for positive growth in the upcoming
quarters. The key among these include the $385 million contract
acquisition from Airbus for the supply of A400M military cargo
planes and a modification contract for the A350 program.
Another highlight is the contract extension for the operation
of the Lake City Army Ammunition plant for 7 more years, which
could go up to 10 years.
Alliant's debt minimization strategy also paid off well with
its long-term debt obligations declining by 17.8% compared with
its debt level as of March 31, 2012. Moreover, the dividend hike
of 30% is expected to retain the investors' confidence on the
We anticipate these triggers will enable Alliant to go into a
full development mode in the near-term. The company consistently
posted earnings surprises in the last seven quarters. However,
the imminent threat of defense budget cuts by the U.S. government
will constrict growth opportunities of the company.
Alliant Techsystems currently maintains a short-term Zacks #2
Rank (Buy Rating). The company estimates its fiscal 2013 sales
figure to shoot up to the range of $4.1-$4.2 billion versus the
prior range of $4.05-$4.15 billion.
The Zacks Consensus Estimates for the third quarter and full
year fiscal 2013 presently stand at $1.71 per share and $7.66 per
Another defense and aerospace player,
General Dynamics Corporation
) is also gearing up its business to weather the impending fiscal
austerity. General Dynamics recently completed the strategic
acquisition of Applied Physical Sciences Corp. of Groton,
Connecticut. It is a leading provider of applied research and
With a market capitalization of $1.99 billion, the Arlington,
Virginia based company has 17,000 employees in total. Alliant
Techsystems is engaged in the business of providing aerospace,
defense, and commercial products to the U.S. government, allied
nations, and prime contractors.
ALLIANT TECHSYS (ATK): Free Stock Analysis
GENL DYNAMICS (GD): Free Stock Analysis
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