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Eaton Corporation (ETN - Analyst Report) received a contract to supply the fuel tank inerting system for the new Bombardier Learjet 85 business jet. With this contract, the company will also clear the way for the regulatory process to achieve Federal Aviation Administration (“FAA”) inerting system certification for the Learjet 85 program.

The Learjet 85 is the latest Learjet development program by aircraft manufacturer Bombardier Aerospace, a division of Bombardier Inc. The fuel tank inerting system will improve the safety of the aircraft by injecting inert gas into fuel tanks while significantly reducing the potential for ignition sources.

The contract reflects Eaton’s continued growth as a leading fuel-inerting system supplier for the aerospace industry. Since 2008, the company’s top line Learjet 85 program content has been twined, which reflects Eaton’s global strength in power management and the continued development of fuel-inerting technologies that help to improve aircraft safety.

In the aerospace industry, Eaton is a leading supplier of hydraulic, electro-hydraulic pump and generator products and integrated systems, engine and airframe fuel pumps, electric motors, fluid, fuel and air delivery products and systems, integrated control systems; cockpit controls and displays; power and load management systems. Eaton serves commercial and military aviation, aerospace, military weapons, marine and off-road markets worldwide. Recently, the company had also received a contract from Embraer to supply hydraulic components for the KC-390 next-generation military transport aircraft.

Eaton operates in a number of markets and faces a wide array of competitors in varied niches. The company has grown through strategic acquisitions and joint ventures, which either complement or expand its businesses. The strong momentum across Eaton’s business segments will likely continue amidst buoyant end-market demand and market share gains.

However, we remain concerned due to the uncertainty prevailing in the European markets and slower-than-expected growth in the Chinese markets. Currently, the company retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

The company mainly competes with Ingersoll-Rand Plc (IR - Analyst Report) and Parker Hannifin Corporation (PH - Analyst Report).

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