Bottom Line Inc

February 22, 2017 | Esterline Technologies Corporation | ESL


Today’s Stock of the Week is a diversified defense technology company that is in the midst of a turnaround.

Technology Turnaround

Esterline Technologies Corporation (ESL) is a diversified provider of aerospace and defense technologies ranging from avionics controls and communications systems to sensors for aircraft engines that measure speed and temperature to exotic materials used in stealth technologies.

Esterline grew through a series of mergers and acquisitions that turned it into a sprawling and not very well integrated company in need of common controls and common supply chains. For the past three years, management has been working on these and other organizational issues—and Esterline is finally starting to show the benefits, with facility consolidation, improved systems and operations, and better operating margins. Margins still are only around 13% and have the potential to grow to 17% to 18%.

Revenue is increasing steadily, but earnings this year will drop slightly because some tax credits will run out.

Fiscal year: Sept. Earnings per share: 2018 est./$5.72…2017 est./$4.75…2016/$4.86.

This Week’s Expert

Michael Ciarmoli, a director of the Capital Goods Equity Research Team, covers companies in the aerospace and defense sector for SunTrust Robinson Humphrey, Atlanta, a division of SunTrust Banks.

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