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Analyst Blog

On Aug 13, 2013, we upgraded our recommendation on Alliant Techsystems Inc. to Outperform from Neutral. The company currently has a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

There are several catalysts, including Alliant’s favorable performance in the first quarter of fiscal 2014 and a likely positive impact from the acquisition of Caliber Company in the forthcoming quarters, which led us to upgrade our recommendation on the stock.

In the first quarter of fiscal 2014, Alliant’s earnings per share and revenues surpassed the Zacks Consensus Estimates. The improvement in performance was primarily driven by strong sales at the company’s Aerospace and Sporting divisions, lower interest expenses, and a decrease in tax rate and share counts.

In Jun 2013, Alliant acquired Caliber Company with a transaction value of $315 million. This acquisition is enhancing the company’s product coverage while strengthening its market penetration. We expect the acquisition to be an important growth driver for Alliant’s future performance, given the improving demand for sporting goods in the U.S.

In addition, improvement in operational efficiency as a result of the realignment of Alliant’s business segments and steady focus on technological innovation also propelled us to change our recommendation.

Other Stocks to Consider

Other stocks in the industry that are currently performing well include AAR Corp. , Curtiss-Wright Corporation and Ducommun Inc. , each with a Zacks Rank #2 (Buy).

Arlington, Va.-based Alliant Techsystems is an aerospace and defense company, supplying products to the U.S. government agencies, and its prime contractors and sub-contractors.

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