Goodrich Corporation

Goodrich raised full year guidance as sales rose 17% in the second quarter on the strength of equipment sales to the large commercial airplane market. The company has surprised on estimates the last 4 quarters by an average of 20.18%. Goodrich has a forward P/E of 9.75.

Company Description

Goodrich Corporation (GR - Snapshot Report) manufactures products for the aerospace, defense and homeland security markets, including landing gear, engine control systems, sensors and safety systems.. The company operates 90 facilities in 16 countries.

The company has been landing new contracts. On Aug 18, Goodrich announced it would be providing a landing gear system for the Cessna Model 850 citation Columbus large cabin intercontinental business jet. While Goodrich has supplied Cessna with wheels and brakes in the past, this was the first sale of landing gear to Cessna.

Sales Jump 17% in the Second Quarter

On July 24, Goodrich reported second quarter earnings that beat Wall Street estimates by 32.11%. Net income was $187 million, or $1.46 per share, compared to $125 million, or 98 cents per share, in the second quarter of 2007. Analysts expected $1.09 per share.

Sales grew by 17% to $1.849 billion from $1.576 billion in the year ago period. Growth was led by a 28% increase in sales of large commercial airplane original equipment. Regional, business and general aviation airplane original equipment sales followed close behind, rising 26%. Defense and space sales grew by 11%.

During the quarter, Goodrich was selected by Pratt & Whitney to be the provider of the complete nacelle systems for its new Geared Turbofan engine for both the Mitsubishi Regional Jet (MRJ) and the Bombardier CSeries aircraft families. The contract is expected to create more than $5 billion in both original equipment and aftermarket revenue during the 25-year period after the aircraft enters into service.

Goodrich Raises 2008 Guidance

The company raised full year estimates to $4.80 to $4.95 from $4.30 to $4.45 and expects revenues to be on the high end of previous guidance range of $7.2 billion to $7.3 billion. Sales are expected to grow 14% over 2007.

Consensus Estimates Rise For the Third Quarter and the Full Year

Responding to the bullish second quarter and the higher full year forecast, covering analysts have been raising estimates for both the third quarter and the full year. In the last 60 days, third quarter estimates are up 5 cents to $1.14 from $1.09 per share.

For the full year, estimates jumped 42 cents to $4.93 from $4.51 per share, which is in-line with the company's increased guidance range.

Value Fundamentals

Goodrich is a Zacks #1 Rank (Strong Buy) stock. Its forward P/E is 9.75. GR has a price-to-book of 2.17. The company also has a solid five year average return on equity (ROE) of 16.90%. As an added bonus, the company pays a dividend with a current yield of 1.80%.