Goodrich Corporation (GR) was awarded a contract by the U.S. Air Force to deliver two upgraded Electro-Optical Reconnaissance Sensors (SYERS) for use on the U-2 aircraft.
These upgrades, known as SYERS-2A, will enhance the U-2 aircraft’s functionality by adding extra multi-spectral imaging capability, which will be helpful for discerning imagery. Work on the contract would be done in Goodrich’s facility in Chelmsford, Massachusetts.
The U-2 aircraft, manufactured by Lockheed Martin Corporation (LMT), is a single-engine, very high-altitude reconnaissance aircraft. The aircraft is also used for electronic sensor research and development, satellite calibration and satellite data validation. The importance of the surveillance and reconnaissance aircraft has increased manifold due to the recent trends of low-intensity conflicts round the globe.
Although the U-2 aircraft is a cold war relic the cost of replacing the fleet with its successor has kept the plane afloat. The U-2’s planned replacement is a pilot less drone from Northrop Grumman Corporation (NOC) titled Global Hawk.
Goodrich is a global supplier of components and systems for communications and avionics. Most of its products are sold to both government and commercial customers. This draws government funding towards the development of its products that enjoy a dual-end market. Such a market generates higher volume sales, creating economies of scale that help to win cost-sensitive government contracts.
Earlier in February 2011, Goodrich announced its fourth quarter and fiscal 2010 results. Its fourth quarter operating earnings were $1.15 per share, ahead of the Zacks Consensus Estimate of $1.05. Goodrich reported fiscal 2010 operating earnings of $4.50 that comfortably beat the Zacks Consensus Estimate of $4.14.
The company’s total operating revenue in the fourth quarter 2010 was $1,806.2 million compared with the Zacks Consensus Estimate of $1,847 million. In fiscal year 2010, total operating revenue was $6,966.9 million versus the Zacks Consensus Estimate of $7,089 million.
Going forward, the company expects its fortunes to turn dramatically with commercial airliners focusing on capacity expansion to meet the rising demand.
Goodrich has a geographically-diverse customer mix, diverse presence in both commercial and business jets, sees resurgence in commercial aftermarket sales, a strong balance sheet, incremental dividend and an ongoing share repurchase program; all just enough to make Goodrich stand tall.
Goodrich presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.
GOODRICH CORP (GR): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
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