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We have maintained our Outperform recommendation on Alliant Techsystems Inc. (ATK - Analyst Report). The company currently has a Zacks Rank #2 (Buy).

Why the Reiteration?

In the third-quarter of fiscal 2013, Alliant’s earnings per share and revenues surpassed the Zacks Consensus Estimates primarily to higher profit margins at the Aerospace and Sporting Groups.

Recently, Alliant completed its segment realignment. We expect this to maximize the company’s operational efficiency, enhance its ability to meet customer requirements and reduce operating costs. This initiative will gradually improve the overall financial performance.

In the last couple of years, Alliant has grown substantially as a result of both internal expansions and a series of acquisitions. The company acquired a number of companies including Blackhawk Industries Products Group, Unlimited LLC and Eagle Industries in the past five years. These acquisitions significantly expanded the company’s sales into the tactical accessories market, enabling it to leverage its existing distribution network to gain market-share while realizing synergies.

The current Zacks Consensus Estimate for fourth-quarter fiscal 2013 of $1.89 per share exceeded the year-ago figure by 1.75%.

For fiscal 2013, Alliant increased its earnings guidance in the range of $7.90-$8.10 per share from its earlier projection of $7.40-$7.70 per share primarily due to increased sales estimates and improved operating results.

Other Stocks to Consider

Other stocks in the aerospace and defense sector that are presently doing favorable business include Esterline Technologies Corporation (ESL - Snapshot Report), having a Zacks Rank #1 (Strong Buy), and Rockwell Collins Inc. (COL - Analyst Report) and CAE Inc. (CAE - Snapshot Report) with Zacks Rank #2 (Buy).

Arlington, Virginia-based Alliant Techsystems Inc. provides aerospace and defense products to the U.S. government agencies.

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