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NEW YORK (TheStreet) -- Shares of Alliant Techsystems Inc.  (ATK) are up 6.61% to $148.00 in pre-market trade after it was reported that the ammunition maker will merge with Orbital Sciences Corp. (ORB) , after spinning off its sporting gun business, Reuters reports.

Shares of Orbital Sciences are surging, up 20.32% to $31.97 in pre-market trade.

Orbital stockholders will get 0.449 ATK shares per Orbital share, according to ATK.

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The combined company, to be called Orbital ATK Inc, will own about $1.7 billion of ATK's debt, Reuters noted.

ATK said its shareholders will own about 53.8% of the combined company, and Orbital shareholders will hold the rest.

The deal is expected to close by year's end.

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

"We rate ALLIANT TECHSYSTEMS INC (ATK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

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

  • The revenue growth came in higher than the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 14.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 27.46% and other important driving factors, this stock has surged by 94.46% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ATK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALLIANT TECHSYSTEMS INC has improved earnings per share by 27.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ALLIANT TECHSYSTEMS INC increased its bottom line by earning $8.32 versus $7.93 in the prior year. This year, the market expects an improvement in earnings ($9.95 versus $8.32).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Aerospace & Defense industry average, but is less than that of the S&P 500. The net income increased by 27.1% when compared to the same quarter one year prior, rising from $63.18 million to $80.29 million.
  • You can view the full analysis from the report here: ATK Ratings Report

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