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Growth & Income

Kaman Corp (KAMN - Snapshot Report) has been surging lately.

The company recently delivered third quarter earnings per share of $0.49, beating the Zacks Consensus Estimate by 26%, driven by double-digit sales growth and an expanding operating margin. Analysts have also been revising their estimates higher following the strong quarter.

Although the share price has risen over 30% since early September, the stock still appears reasonably valued.

Company Description

Kaman Corp operates in two segments: Industrial Distribution (62% of sales), and Aerospace (38%).

The Industrial Distribution division is the third largest power transmission and motion control industrial distributor in North America.

The Aerospace segment is a manufacturer and subcontractor in the global commercial and military aerospace and defense markets.

The company is based in Bloomfield, Connecticut and has a market cap of $740 million.

Third Quarter Results

On November 1, Kaman Corp reported it results for the third quarter of 2010. Earnings per share came in at $0.49, beating the Zacks Consensus Estimate of $0.39. It was a 32% increase over the same quarter in 2009.

Net sales increased an impressive 24% year-over-year. The Industrial Distribution division saw sales growth of 37%, including organic sales growth of 17%. The Aerospace segment grew by 7%.

Operating income increased 33.6% year-over-year, while the operating margin expanded from 5.1% to 5.4%.

Outlook

Analysts have been revising their earnings estimates higher following the strong third quarter, propelling the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2010 is $1.31, up from $1.22 before the third quarter earnings release. Although it represents just 3% growth over 2009 EPS, the 2011 estimate is currently $1.97, corresponding to 50% growth over 2010.

Fundamentals

The stock has been on a tear lately, surging almost 33% since September 1.

KAMN: Kaman Corp

Despite the run up, shares are still trading with reasonable values. The stock trades at 21.7x forward earnings, a premium to the industry average of 18.4x.

Its price to book ratio is in-line with its peers, however, at 2.1.

Kaman Corp has a dividend yield of 1.9%. The company has not raised it since 2007, however.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

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