We reaffirm our recommendation on
Alliant Techsystems Inc.
) to Outperform. In first-quarter fiscal 2013, the company's
earnings and revenue surpassed the Zacks Consensus Estimates as
well as year-ago numbers. These solid results were driven by proper
execution of the programs at the Defense Group and Sporting Group
segments, increase in ammunition sales volume and steady order
We know that Alliant has recently completed its segment realignment
process. We believe this segment realignment will enable the
company to maximize its operational efficiency, enhance support of
customers' requirements, reduce operating cost, leverage the
investments and execute excellence initiatives. These positive
factors gradually improve Alliant's overall financial performance
In the last few years, Alliant has grown substantially as a result
of both internal expansion and a series of acquisitions. The
company completed several major acquisitions in the past five
years, which includes Blackhawk Industries Products Group Unlimited
LLC and Eagle Industries. These acquisitions significantly expanded
the company's sales into the tactical accessories market, enabling
it to leverage its existing distribution network to gain
market-share while realizing synergies.
We view Alliant as a well-diversified aerospace and defense
contractor delivering products and solutions that are vital to the
preservation of the U.S. national security. It is a leading global
supplier of solid rocket motors and one of the largest
manufacturers of ammunitions in the U.S.
It is the sole supplier of various calibers of ammunition to the
U.S. Department of Defense. In addition, Alliant has a strong
relationship with NASA and is developing the Ares 1 Solid Rocket to
replace the Space Shuttle. This diverse revenue stream of the
company will go a long way in improving its future revenue.
ALLIANT TECHSYS (ATK): Free Stock Analysis
GENL DYNAMICS (GD): Free Stock Analysis Report
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However, the U.S. defense budget cutbacks and competition from a
number of players in each of Alliant's business segment could limit
the growth prospects of the company. In addition, the ongoing
withdrawal of troops from Afghanistan could lead to a decrease in
demand for small-caliber ammunition, resulting in short-term
Alliant Techsystems Inc. currently has a short-term Zacks #1 Rank
(Strong Buy rating).
Minneapolis, Minnesota-based Alliant Techsystems Inc. supplies
aerospace and defense products to the United States government
agencies. The company also provides ammunition and related
accessories to law enforcement agencies and commercial customers.
The company competes with
General Dynamics Corporation