On April 4, we have issued an updated research report on
Alliant Techsystems Inc.
). The U.S. aerospace and defense company supplies products and
services to the U.S. government agencies. It also has business
alliance with the National Aeronautics and Space Administration
(NASA). Currently, Alliant Techsystems is expanding its
operations under the Sporting Group segment. In addition, its
effort towards maximization of shareholders' wealth is also
appreciable. However, disruptions in supply of raw materials and
higher expenses at the commercial aerospace business might
challenge the company's future performance.
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Alliant Techsystems, a Zacks Rank #2 (Buy) stock, reported strong
performance in third-quarter of fiscal 2014. Both top as well as
bottom line surpassed the Zacks Consensus Estimate. Quarterly
earnings and revenues also improved year over year, primarily due
to strong contribution from the Sporting Group segment and
positive impact from acquisitions of Bushnell Group Holding Inc.
("Bushnell") and Caliber Company ("Caliber").
Currently, demand for the sporting products is gradually
increasing in the U.S. To meet the growing customer requirement,
Alliant Techsystems is expanding its portfolio under the Sporting
Group segment. The company acquired Bushnell and Caliber in 2013.
These firms offer different types of rifles and sports devices.
These transactions will enable Alliant Techsystems to extend its
product offerings and visibility.
Alliant Techsystems continues to demonstrate its competence in
improving the operating cash flow. The company's cash flow from
operating activities during the first nine months of fiscal 2014
was $222.3 million, up 87.8% year over year. A strong cash
generation capability supports Alliant Techsystems' steady
In addition to extending operations through internal and
inorganic growth projects, Alliant Techsystems has a stable
dividend payment history and is currently following a 2-year
share-repurchase program. These initiatives will allow Alliant
Techsystems to attract more investors on the stock.
However, we know that Alliant Techsystems uses various raw
materials, including steel, copper, zinc and aluminum, to
manufacture several products. Interruptions in supply of raw
materials, delay in replacement of materials or delay in adding
new raw material suppliers might have an adverse effect on the
company's future performance.
Key Picks from the Sector
Some other stocks worth considering in the aerospace and defense
equipment industry include
). While Astronics holds a Zacks Rank #1 (Strong Buy),
Curtiss-Wright and HEICO carry a Zacks Rank #2 (Buy).