Textron Unit Acquires ProFlight, LLC - Analyst Blog


The latest defense contractor to contribute to the acquisition drive is Textron Inc. ( TXT ). The company's business arm TRU Simulation + Training Inc. acquired ProFlight, LLC, a leading innovative and advanced pilot training service provider. TRU Simulation delivers high-fidelity aviation simulation and training services to both civil and military pilots.

ProFlight offers specialized Cessna Citation CJ Series training, Cessna Conquest Series training and innovative continuous currency programs. These programs provide pilots with enhanced training flexibilities and expertise.

The new acquisition will bode well for Textron as it manufactures Cessna aircraft and that most of ProFlight's customers are Cessna pilots. With ProFlight merging with TRU Simulation, Textron will be able to leverage its manufacturing, product and after-market service capabilities to provide comprehensive pilot training solutions to its existing as well as future aviation customers.

The current sequestration wave has drove defense players like Textron to enter into the acquisition mode. Dwindling millitary spending and industry uncertainty has got standard defense operators to consolidate their business through acquisitions beyond the core military sector.   

Notable acquisitions by Textron so far in 2014 include the closure of the purchase of Beech Holdings LLC, the parent company of Beechcraft Corporation in Mar 2014. In addition, the company in May 2014 procured TUG Technologies Corp. from Jacobson Partners. TUG manufactures ground support equipment for airlines, air-freight companies, ground handlers, government agencies and airports.

Meanwhile, defense contract flows has been bumpy for the company this year and Textron is looking to ride the sequestration effect via its growth-by-acquisition strategy. The company got off to a lackluster start in 2014 with earnings lagging the Zacks Consensus Estimates by a sharp 22.5% in the first quarter of 2014. How well these acquisitions will bring synergies to Textron is something we are curious to see.

Currently, Textron carries a Zacks Rank #4 (Sell). However, investors could look out for better-ranked defense stocks like Lockheed Martin Corp. ( LMT ), The Boeing Company ( BA ) and General Dynamics Corp. ( GD ). All these stocks presently sport a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: TXT , BA , GD , LMT



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