Aerospace and defense company
Triumph Group, Inc.
) entered into a definite agreement to acquire the hydraulic
actuation business of GE Aviation, a subsidiary of
General Electric Company
). This transaction will further strengthen Triumph Group's
Aerospace Systems segment.
Triumph Group will pay $70 million for the actuation business,
which is expected to be immediately accretive to earnings. The
actuation business has three facilities, which are expected to
generate $180 million in annual revenues. This business has
commercial ties with
The Boeing Co.
), Airbus and other major airframers.
GE Aviation's advanced technology and penetration in the aviation
market will make this a lucrative buy for Triumph Group. The
services offered by the actuation business of GE Aviation find
demand across commercial, business and military jet markets.
Even if we let go of military demand, a study from Boeing revealed
that there is a huge potential in the commercial aerospace market.
Boeing's study forecasts demand for 35,280 airplanes for the
2013-2032 period. In that light the actuation business will be a
strategic fit for the company's aerospace operations.
In the fourth quarter of fiscal 2014, revenues from Aerospace
Systems increased 28% year over year to $235.3 million, of which
30.2% came from recent acquisitions like Triumph Processing-Embee,
Triumph Engine Control Systems and Triumph Gear
Systems-Toronto. So it seems like the company is presently
opting for an inorganic growth strategy to expand this lucrative
Triumph Group expects earnings from continuing operations for
fiscal 2015 in the range of $5.65 to $5.75 per share. The Zacks
Consensus Estimate for fiscal 2015 is pegged at $5.71 per share.
Triumph Group presently carries a Zacks Rank #3 (Hold). Investors
interested in the aerospace and defense equipment industry may
consider stocks like
Spirit AeroSystems Holdings, Inc.
) among others. Spirit AeroSystems holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
BOEING CO (BA): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
SPIRIT AEROSYS (SPR): Free Stock Analysis
TRIUMPH GRP INC (TGI): Free Stock Analysis
To read this article on Zacks.com click here.