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We reiterate our Outperform recommendation on aerospace and defense major Alliant Techsystems Inc. (ATK - Analyst Report). The company registered favourable top-and bottom-line results in the second quarter of fiscal 2013 with both lines beating the Zacks Consensus Estimates.

We believe the company’s tall booking orders and large-scale contract wins in the aerospace, defense and sporting segment will certainly set the momentum for positive growth in the upcoming quarters. The key among these include the $385 million contract acquisition from Airbus for the supply of A400M military cargo planes and a modification contract for the A350 program.

Another highlight is the contract extension for the operation of the Lake City Army Ammunition plant for 7 more years, which could go up to 10 years.

Alliant’s debt minimization strategy also paid off well with its long-term debt obligations declining by 17.8% compared with its debt level as of March 31, 2012. Moreover, the dividend hike of 30% is expected to retain the investors’ confidence on the company’s stock.

We anticipate these triggers will enable Alliant to go into a full development mode in the near-term. The company consistently posted earnings surprises in the last seven quarters. However, the imminent threat of defense budget cuts by the U.S. government will constrict growth opportunities of the company.

Alliant Techsystems currently maintains a short-term Zacks #2 Rank (Buy Rating). The company estimates its fiscal 2013 sales figure to shoot up to the range of $4.1-$4.2 billion versus the prior range of $4.05-$4.15 billion.

The Zacks Consensus Estimates for the third quarter and full year fiscal 2013 presently stand at $1.71 per share and $7.66 per share, respectively.

Another defense and aerospace player, General Dynamics Corporation (GD - Analyst Report) is also gearing up its business to weather the impending fiscal austerity. General Dynamics recently completed the strategic acquisition of Applied Physical Sciences Corp. of Groton, Connecticut. It is a leading provider of applied research and development services.

With a market capitalization of $1.99 billion, the Arlington, Virginia based company has 17,000 employees in total. Alliant Techsystems is engaged in the business of providing aerospace, defense, and commercial products to the U.S. government, allied nations, and prime contractors.

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