What recession? Esterline Technologies (ESL) just reported a record year for fiscal 2010 as earnings jumped 23%. Shares are still not expensive, trading at just 14.7x forward estimates.
Esterline manufactures specialized parts in Avionics & Controls, Sensors & Systems and Advanced Materials for the aerospace and defense markets.
80% of its revenue comes from aerospace and defense with 20% from industrial applications in those areas.
It has global reach, with facilities in 12 U.S. states, Canada, France, Germany and the United Kingdom.
Record Year in Fiscal 2010
On Dec 9, Esterline reported its fiscal fourth quarter and full year 2010 results and blew by the Zacks Consensus Estimate by 30.1%.
Earnings per share were $1.60 compared to the Zacks Consensus of $1.23 per share. It was the third beat in the last 4 quarters.
Revenue rose 10.3% in the quarter to $430.5 million from $390.1 million a year ago. It was boosted by strong demand for military cockpit programs and medical imaging systems and increased activity in the commercial aircraft segment as narrow body aircraft production rises at Boeing and Airbus.
For the year, revenue rose 8.5% to $1.53 billion from $1.41 billion in fiscal 2009 with most of the increase being organic growth.
Good Times to Continue in Fiscal 2011
In 2010, the company had a soft first quarter and then saw sales steadily strengthen throughout the year. Historically, the first quarter is the company’s weakest.
Esterline expects this to happen again in fiscal 2011 with performance gaining momentum as the year goes on.
Revenue is expected to grow between 5% and 8% and earnings per share are projected in the range of $4.40 and $4.65 per share.
Zacks Consensus Estimates Climb
Given the bullish outlook for fiscal 2011, it’s not surprising that analysts’ estimates have been rising.
The fiscal 2011 Zacks Consensus jumped 56 cents to $4.56 in the last week. This is earnings growth of 6.87%, or just about in the middle of the company’s guidance range.
The fiscal 2012 Zacks Consensus has also risen in the last week to $4.92 from $4.55 per share. That would be additional earnings growth of 7.8%.
Value Characteristics
Esterline’s forward P/E of 14.7 is lower than its peers at 16.2. It also has a price-to-book of 1.4, which is well within the value parameters of under 3.0.
Esterline is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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