Credit Suisse lowered its earning estimates for 2015, 2016 and 2017 to $4.35, $5.55 and $.635 from $4.67, $6.05 and $6.74, respectively.
"With the recent selloff, ESL shares are looking a bit undervalued, especially as we consider the company as a relatively attractive acquisition target," Credit Suisse said in a note.
Credit Suisse tentatively believes that Esterline won't have a clean year until 2017, once restructuring and adjustments are out of the way, but note that predicting is difficult with a volatile company.
Shares of Esterline were down 5.97% to $77.03 on high trading volume late Friday afternoon. The company's average trading volume is 246,878, and on Friday afternoon it was up to 2.03 million.
Separately, TheStreet Ratings team rates ESTERLINE TECHNOLOGIES CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ESTERLINE TECHNOLOGIES CORP (ESL) a HOLD. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $50.48 million or 46.20% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 25.90%.
- 37.98% is the gross profit margin for ESTERLINE TECHNOLOGIES CORP which we consider to be strong. Regardless of ESL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.96% trails the industry average.
- ESTERLINE TECHNOLOGIES CORP's earnings per share declined by 44.8% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ESTERLINE TECHNOLOGIES CORP reported lower earnings of $5.15 versus $5.22 in the prior year. For the next year, the market is expecting a contraction of 9.0% in earnings ($4.69 versus $5.15).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry. The net income has significantly decreased by 46.3% when compared to the same quarter one year ago, falling from $36.90 million to $19.81 million.
- You can view the full analysis from the report here: ESL Ratings Report