Goodrich Corporation

Highlighted stocks include Goodrich Corporation (GR - Snapshot Report), Hill-Rom Holdings, Inc. (HRC - Snapshot Report), Carter's Inc. (CRI - Snapshot Report), and Simcere Pharmaceutical Group (SCR - Snapshot Report).

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Goodrich Corporation (GR - Snapshot Report), the manufacturer of landing gear, engine control systems, sensors and safety systems for the aerospace, defense and homeland security markets, continues to be on a roll as revenues jumped 11% in the third quarter resulting in the company beating estimates for the 4th consecutive quarter.

Net income rose 34% to $168 million, or $1.33 per share, from $127 million, or 99 cents, in the year ago period. Analysts expected only $1.14 per share.

Sales grew 11% to $1.772 billion from $1.602 billion in the third quarter of 2007. The company saw strength in the regional, business and general aviation equipment sales segment which saw sales rise 29%.

Aftermarket sales for large commercial, regional, business and general aviation also climbed 13%. Defense and space sales increased 12% compared to the same period in 2007.

2008 EPS Guidance Raised

Goodrich's business was negatively impacted by the Boeing strike, which has now settled. On Oct 23, when Goodrich reported third-quarter earnings, the company lowered its 2008 sales outlook to $7.1 billion from $7.3 billion due to the strike. However, it raised EPS guidance to a range of $4.90 to $5.00 from previous guidance of $4.80 to $4.95.

First Forecast for Full Year 2009

Goodrich is being cautious about 2009 given the economic environment. The forecast for 2009 was also made before the end of the Boeing strike, which affected large commercial airplane sales.

The initial sales guidance calls for sales of $7.7 to $7.8 billion, or growth of about 8 to 10% from 2008's outlook. EPS guidance is in the range of $5.05 to $5.25, an increase of 2 to 8% over 2008's outlook.

Consensus Estimates Rise

Given the company's guidance, consensus estimates for 2008 and 2009 have been rising. 2008 consensus estimates are up 9 cents to $5.02, which is higher than the company's guidance, in the last 60 days.

For 2009, consensus estimates jumped 23 cents to $5.13, which is in the middle of the company's initial 2009 forecast, in the last 30 days.

Value Fundamentals Still Strong

When we last reviewed Goodrich on Sep 10, the company was a Zacks #1 Rank (strong buy) stock. It is now a Zacks #2 Rank (buy) stock.

Goodrich is trading much cheaper than September, at only 6.3x forward earnings compared to 9.8x. GR's dividend yield has also climbed to 3.80% compared to only 1.80% in September.

Read the Sep 10 analysis.

Update to Previous Value Zacks Rank Buy Stocks

Simcere Pharmaceutical Group (SCR - Snapshot Report), the Chinese-based manufacturer of generic pharmaceuticals and anti-cancer drugs, saw revenues soar 37.1% as sales of generic pharmaceutical products stayed hot in China. Simcere is cheap. It's trading at only 5.6x forward earnings. Read the Nov 25 analysis.

Carter's, Inc. (CRI - Snapshot Report), the children's clothing retailer, is bucking the retail doom and gloom as it intends to open 21 new stores in the fourth quarter. The company has surprised on estimates 3 out of the last 4 quarters by an average of 311.92%. Carter's has a forward P/E of 12.09. Read the Nov 26 analysis.

Hill-Rom Holdings Inc. (HRC - Snapshot Report), the manufacturer of hospital equipment, reaffirmed 2009 guidance despite the rough economic environment as revenues grew 14.1% in the fourth quarter. Hill-Rom is trading at 12.8x forward earnings. Read the Nov 28 analysis.