Esterline shares up after strong 3Q earns
Shares Esterline Technologies Corp. rose Friday after the defense contractor reported fiscal third-quarter earnings that beat analysts expectations and raised its annual outlook.
THE SPARK: Esterline reported a 22 percent gain in third-quarter net income after the market closed Thursday. It also raised its fiscal 2010 forecast to $3.85 to $3.95 per share. Profits were helped by better sales in the company's avionics and controls division.
THE ANALYSIS: Morgan Joseph analysts Michael French and James R. Moore wrote that Esterline has several areas of growth potential, with avionics expected to grow "significantly" in fiscal 2011. That includes work on a military training plane and a growing demand for retrofitted cockpits.
Credit Suisse analyst Robert Spingarn wrote that the company is starting to deliver consistent profit margin growth. He also said that while U.S. defense budgets are under pressure for cost savings, "ESL's fragmented international retrofit exposure makes it somewhat less vulnerable to the U.S. defense budget."
SHARE ACTION: Shares rose $4.49, or 9 percent, to $54.34 in early afternoon trading. Esterline shares have ranged between $29.87 and $57.85 over the past 52 weeks.
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