Rockwell Collins Inc.
) has been sanctioned the repurchase of its common stock worth
$500 million from its Board of Directors. The announcement proves
the company's ability to generate a steady stream of cash flow in
the long term.
The current approval takes the share authorization amount to $604
million. Going forward, the company intends to maintain an active
share repurchase program. It indicated that this additional
authorization is expected to meet all share repurchase plans for
the balance of fiscal year 2013 and into 2014.
In Jan 2013, the company released its first quarter 2013 results
ending Dec 31, 2012 with earnings of 94 cents per share outpacing
the Zacks Consensus Estimate of 90 cents the and year-ago
quarterly earning of 86 cents per share.
The earnings per share figure was up 9% in comparison to net
income driven by the active share repurchase program. In the
first quarter of 2013, the company repurchased 6 million shares
of common stock at a total cost of $333 million.
Rockwell Collins ended the quarter with cash and cash equivalents
of $337 million. At the end of fiscal 2012, ending Sep 30, 2012,
the company had $335 million in cash. Cash from operating
activities for the first quarter of 2013 totaled $63 million, an
increase of $127 million from a cash burn of $64 million in the
first quarter of 2012.
As of Dec 31, 2012, short-term commercial paper borrowings
outstanding were $345 million. These commercial paper borrowings
were incurred in order to fund a portion of the company's share
The company has also been paying dividends consistently. In Jan
2013, the company announced to pay a quarterly dividend of 30
cents per share on Mar 4, 2013 to shareholders of record at the
close of business on Feb 11, 2013. Indeed, the company had
increased its dividend by 25% in Apr 2012.
Another prominent aerospace stock,
L-3 Communications Holdings Inc.
) has also increased its dividend as well as announced a new
share repurchase program a few days back. It increased its
quarterly dividend by 10% and also authorized the repurchase of
up to an additional $1.5 billion of the company's common stock
through Jun 30, 2015.
Based in Cedar Rapids, Iowa, Rockwell Collins designs,
manufactures, and supports software and hardware solutions for
aircraft communication, navigation, signals intelligence, and
weapons systems as well as surveillance systems for government,
military, and commercial applications.
Rockwell Collins is the foremost global supplier of
communications and avionics equipment for both commercial and
military customers. Moreover, the company is witnessing a
rejuvenated business jet market with rising original equipment
and improving aftermarket fortunes.
Furthermore, a strong balance sheet, incremental dividend, and
ongoing share repurchase program add visibility to the story. The
company's dividend increase as well as its share repurchase
strategy demonstrates Rockwell's commitment to return value to
its shareholders. The company presently retains a short-term
Zacks Rank #2 (Buy).
ALLIANT TECHSYS (ATK): Free Stock Analysis
ROCKWELL COLLIN (COL): Free Stock Analysis
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Alliant Techsystems Inc.
), both with a Zacks Rank #2 (Buy).