This defense, aerospace, and industrial contractor beat earnings estimates by $0.11 last quarter. The company just announced it will acquire the global Rotary Transfer Systems business from Morgan Advanced Materials, for a purchase price of €40 million ($42 million U.S.). The transaction includes Rotary’s European manufacturing sites in Antweiler, Germany and Chalon-St-Memmie, France, and is expected to close within 60 to 90 days.
Moog Inc. (MOG-A)
From The Cutting Edge
Moog Inc. (MOG-A) designs, manufactures, and integrates high performance precision motion control products and systems. These systems control a wide range of high-tech products including military and commercial aircraft, satellites and space vehicles, missiles, industrial machinery, wind energy, marine applications, and even medical equipment.
Moog breaks its business into the following segments: 1) Aircraft Controls, 2) Space and Defense, 3) Industrial Systems, and 4) Components.
A few interesting technologies from the firm include:
• ‘Green’ technology for satellite propulsion
• Active vibration control (AVC) for aerospace and defense mechanism
• Prognostics for defense vehicles
• Remote acoustic hailing for long-range communication and collateral damage avoidance
• Next generation flight controls
• Of particular note is Moog’s role as a system integrator for the Lockheed Martin F-35 Joint Strike Fighter, providing critical technology and major sub-systems for the highly advanced fighter jet. In the firm’s most recent quarter, F-35 for Mood sales were up 26% to $27 million.
Additionally, Moog is partnered with Northrup Grumman for its highly advanced Guardian anti-missile system, which tracks incoming missiles and uses a laser beam to jam their guidance systems. In Moog’s latest quarter, aerospace and defense sales reached $39 million, up 11%, and were largely attributable the Guardian program.
Moog last reported earnings in January, posting sales of $590 million for the first quarter, representing an increase of 4% from last year. Sales were up nicely in three segments: Aircraft, Space and Defense, and Components, but down in Industrial.
Net earnings for the quarter came in at $31 million or earnings per share of $0.84. Profit margins for Moog rest at 5.4%.
The biggest risk factor for Moog to keep an eye on is debt, though the company is actively working that down. In the first quarter, net debt as a percentage of total cap was reported at 40.8%, down from 44.6% a year ago.
We rate Moog Inc. (MOG.A) a ‘Buy’ under $70.00. The Risk level is ‘Medium’.
Jason Stutman, The Cutting Edge, www.angelpub.com, 877-303-4529, February 28, 2017