This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bullish Earnings Support Key Defense Companies

Stocks in this article: PCPTGIBEAV

Editor's note: Our Pre-Memorial Day special examines military-related stocks and how to buy, sell or trade them. This feature includes a video by Gregg Greenberg, Defense-Stock Domination; and articles by Marc Courtenay One Priced to Buy; Robert Weinstein Bigger Guns, Bigger Profits; Richard Saintvilus Boeing's Offense Is Defense; Richard Suttmeier Sequester Survivors; and Richard Cox Bullish Earnings Support Defense.

NEW YORK ( TheStreet) -- One of the stories not covered very much this year has been the strong earnings surprises seen by companies with significant exposure to the defense industry.

For the year to date, major rallies have come as a result of these upside surprises. But investment opportunities can still be found as valuations remain stable and a bullish outlook supports key areas of the defense sector. Here, we look at three companies well-positioned for continued growth.

Precision Castparts (PCP)

Precision Castparts showed a 23% increase in its fiscal fourth-quarter earnings on improved sales in all segments of its cast metal parts business. The company makes castings and metal forgings for gas turbines and airplanes, and its revenue performance has seen gains for each of the last three years. The market environment has been widely supportive of these trends, with steady improvements seen in aerospace demand.

Strong revenue performance has also enabled the company to broaden its operations through acquisitions. In January, Precision Castparts purchased Titanium Metals Corp. for $2.9 billion, in a move that will allow for expansion in Precision's titanium capabilities. In March, the company outlined an agreement to buy SKF AB's metallic-rods unit for $52 million.


Precision's fiscal fourth-quarter profits came in at $414.2 million, equal to $2.82 per share. This is a marked increase from the $336.1 million ($2.30 per share) seen the previous year. Sales rose by 25% to $2.44 billion. Analysts, on average, were looking for earnings of $2.75 per share on revenue of $2.51 billion for the period ending March 31.

Areas of strength were seen in the company's forged products segment -- with gains of 31% to $1.12 billion -- and in air-frame products sales, which saw improvements of 40%. Trading with a P/E of 21.6, PCP stock has seen gains of nearly 14% for the year to date, making the company a strong option for momentum strategies.

Triumph Group (TGI)

Triumph Group is another strong earnings performer, with fiscal fourth-quarter adjusted earnings from continuing operations coming in at $1.68 per share. This creates a 7% improvement from the $1.57 per share seen last year and compares well to the $1.59 per share expected by the consensus. In fiscal year 2013, adjusted income from continuing operations rose to $6.21 per share. This is an increase of roughly 24% from the $5.01 seen in fiscal year 2012.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs