On Mar 14, Zacks Investment Research upgraded Wesco Aircraft Holdings, Inc. (WAIR) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Wesco Aircraft has been witnessing rising earnings estimates on the back of fiscal first-quarter 2014 results where both the top and the bottom line improved year over year. Moreover, this aerospace/defense company delivered positive earnings surprises in 2 of the last 4 quarters with an average beat of 6.15%. The long-term expected earnings growth rate for this stock is 12.5%
The company delivered adjusted earnings of 27 cents per share on revenues of $224.7 million. While revenues improved 6.4% year over year, the bottom line rose 8% over the prior-year quarter. Wesco Aircraft continues to witness solid international growth.
The company continues to expect sales of $975 million to $1.01 billion in fiscal 2014, which translates into a year-over-year improvement of 8.1%–12.0%. The affirmed earnings are projected between $1.25 and $1.31 per share and adjusted earnings between $1.31 and $1.37 per share in fiscal 2014.
The Zacks Consensus Estimate is pegged near the higher end of the company’s adjusted earnings guidance. The company’s high levels of activity in orders, in addition to current contracts, and contract renewals with existing customers reinforce its confidence to achieve its expectations.
Wesco Aircraft is also active on the acquisition front. At the end of last month, the company closed the buyout of Haas Group Inc. for $550 million in cash from certain investment funds affiliated to The Jordan Company, L.P.
The acquisition will help Wesco Aircraft to cut costs and comply with even more complex regulatory requirements for chemical usage. Wesco will also stand to gain access to Haas’ proprietary IT system (“tcmIS”) that interfaces directly with customer and supplier enterprise resource planning systems.
The Zacks Consensus Estimate for each of fiscal 2014 and 2015 increased by a penny over the last 30 days to $1.36 and $1.58, respectively.
Other Stocks to Consider
Other players in the industry, which look attractive at current level are Huntington Ingalls Industries, Inc. (HII), Lockheed Martin Corp. (LMT) and Northrop Grumman Corp. (NOC). While Huntington Ingalls holds the same Zacks Rank as Wesco Aircraft, Lockheed Martin and Northrop Grumman carry a Zacks Rank #2 (Buy).
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