Why Huntington Ingalls, Orbital ATK, and TransDigm All Surged This Week

Three Aerospace & Defense Stocks – Three Winners

Three of America’s biggest names in aerospace and

defense reported earnings this week.

The crowd went wild.

What:Huntington Ingalls (NYSE: HII) spiked after reporting earnings Thursday, rising as much as 9.5% before settling down to a 4.4% gain.

So What: Fiscal Q2 revenues eked out a 1.5%

gain, rising to $1.75 billion and matching expectations

Profitability widened dramatically. Operating profit margins rose 490 basis points, to land at 15.4%

Earnings, as a result, shot 57% higher, hitting $3.20 per share, and beating expectations with a stick

Now What:Now here’s the best part:

For every $1 of revenue Huntington collected last quarter, it added

$2.60 in new contracts. Today, Huntington boasts $24.3 billion worth of backlogged work.

At its new-and-improved 15.4% profit margin, that should yield beaucoup profits for years to

come.

What:

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Orbital ATK (NYSE: OA) also reported earnings Thursday. Orbital stock’s 6.9% gain

eclipsed even Huntington’s strong performance.

So What:Sales for the quarter

grew 58%, to $1.13 billion

Operating profits on those sales leapt 75%, to $126 million

Earnings per diluted share grew 27%, to $1.22

Now What:Orbital ATK even raised guidance.

By year-end management expects to have produced:

Revenues of up to $4.5 billion And earnings per share of $4.70

If it hits those targets, the stock is selling for a 16 P/E right now – nearly 20% cheaper than the average aerospace stock.

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What:TransDigm (NYSE: TDG) was trickier, first slumping post-earnings, but then bouncing back with a vengeance to end the week up more than 5%.

So What:Fiscal Q3 sales grew

13%, to $691 millionCash flow increased

7%, to $373.4 millionAnd profitability

returned after last year’s Q3 net loss. TransDigm earned $1.75 per share

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Now What:TransDigm’s numbers fell

short of analyst targets (explaining the initial share price slump).

But management quickly raised guidance on

revenues and earnings, allaying investor

concerns – and helping TransDigm to bounce

back quickly.

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