Esterline Corp (ESL) is coming off of a record-setting year, thanks to solid organic growth.
A consistent flow of upward estimate revisions moved ESL to a Zacks #1 Rank (Strong Buy) and project steady growth in the coming years.
Company Description
Esterline makes engineered products for the aerospace and defence, medical and industrial markets.
Record-Setting Year
On Dec 9 Esterline reported fourth-quarter and year-end results for fiscal 2010. The company earned $1.60 per share for the quarter, a company record. EPS was 37 cents better than the Zacks Consensus Estimate, marking the third consecutive earnings surprise.
Sales in the fourth quarter were up 10% to $431 million. Earnings for the year came in at $130 million, or $4.27 per share, compared to last year’s $106 million and $3.52. The growth was almost entirely organic.
Optimistic Guidance
In the same release Esterline said it expects the top line to improve 5-8% in fiscal 2011 and yield EPS between $4.40 and $4.65.
The Zacks Consensus Estimate jumped toward the high end of the range on the news. Forecasts are averaging $4.61 for this year and $5.04 in 2012. These levels represent growth rates of 8% and 9%, respectively.
M&A Activity
On Jan 3 Esterline announced the acquisition of Eclipse Electronic Systems. The $120 million purchase was made with existing cash reserves. While Esterline is growing organically, they are still looking to add high growth companies to their business.
The Chart
Shares of ESL have been on a slow and steady climb since the earnings release last year. Given the consistency of the upward estimate revisions, this move is justified and should continue into the near future.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
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