On May 13, 2013, the shares of
Rockwell Collins Inc.
) climbed to its 52-week high of $65.77 primarily driven by
strong results in the second quarter of fiscal year 2013 and
effective cash deployment strategy. We believe stable financial
position, increase in dividend rate and an ongoing share
repurchase program have also led the company's share to attain
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ROCKWELL COLLIN (COL): Free Stock Analysis
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Rockwell Collins supplies communications and avionics equipments
to the commercial and military customers. The company's service
to these customers allows it to utilize government funding to
develop products for the dual-end market. This effort
subsequently leads to higher volume sales, which creates
economies of scale in cost-sensitive government contracts.
Rockwell Collins' original equipment manufacturer market has been
stimulated with rising airplane deliveries at
The Boeing Company
) and Airbus. In addition, the company is observing a revived
business jet market with rising original equipments and
progressing aftermarket fortunes.
Rockwell Collins has rewarded shareholders by returning a
substantial portion of its free cash flow through share
repurchases and incremental dividends over the years. During the
second quarter of fiscal year 2013, the company repurchased 1.4
million shares of common stock at a total cost of $84 million.
Currently, the company has share repurchase authorization of $500
However, we are apprehensive about the U.S. government's delayed
funding authorizations, program execution risks, dependence on
international sales and high exposure to fixed price contracts.
Rockwell Collins' fiscal year 2013 earnings guidance ranges from
$4.45 to $4.65 per share. The Zacks Consensus Estimate for fiscal
year 2013 is $4.60 per share, up 4.26% year over year. We expect
the company's long-term earnings growth to be 8.93%.
Rockwell Collins currently has a Zacks Rank #3 (Hold). Apart from
Rockwell Collins, other stocks in the sector that are worth
Alliant Techsystems Inc.
) with a Zacks Rank #2 (Buy).