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NEW YORK (TheStreet) -- Alliant Techsystems Inc. (ATK) was downgraded to "sector perform" from "outperform" at RBC Capital on Monday.

The firm said it lowered its rating on the aerospace, defense, and commercial products company as it believes Alliant Techsystems' sporting outlook is weak, and the future of the merger with Orbital Science Corp. is unclear.

In April of this year the two companies announced they would be combining their aerospace and defense groups in order to create a $4.5 billion defense and aviation systems developer.

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RBC Capital has a $125 price target on Alliant Techsystems.

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TheStreet Recommends

Shares of Alliant Techsystems are lower by 0.82% to $116 in pre-market trading this morning.

Separately, TheStreet Ratings team rates ALLIANT TECHSYSTEMS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLIANT TECHSYSTEMS INC (ATK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, growth in earnings per share, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 11.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANT TECHSYSTEMS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLIANT TECHSYSTEMS INC increased its bottom line by earning $10.46 versus $8.32 in the prior year. This year, the market expects an improvement in earnings ($11.75 versus $10.46).
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 2.7% when compared to the same quarter one year prior, going from $92.59 million to $95.11 million.
  • In its most recent trading session, ATK has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: ATK Ratings Report

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