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Curtiss-Wright's (CW) Safran Acquisition Reaches Completion

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Curtiss-Wright Corporation (CW - Free Report) recently revealed that its acquisition of Safran Aerosystems Arresting Company (“SAA”) has reached completion. The move is in sync with Curtiss-Wright’s intent to boost its earnings and free cash flow generation prospects in the long haul.

Valued at $240 million, the acquisition is likely to boost CW’s capabilities in manufacturing fixed-wing aircraft emergency arresting systems. With operations under Curtiss-Wright’s Naval & Power segment, the business structure of SAA aligns with the acquirer’s current helicopter landing and recovery systems, thus providing an edge for Curtiss-Wright to enhance its product portfolio.

Benefits of the Acquisition

Through the SAA acquisition, Curtiss-Wright aims to become a leading global supplier of fixed-wing aircraft recovery and arresting systems. Also, it is likely to fortify the company’s presence in the global defense market, aided by SAA’s global footprint.

In this context, it is imperative to mention that 75% of SAA’s sales are generated from countries outside the United Sales, including many NATO partners. No doubt, the acquisition is likely to increase its customer base globally.

Moreover, the acquisition is anticipated to be profitable for CW’s earnings and is also expected to generate a strong free cash flow conversion rate of more than 100% for the company, indicating a strong liquidity position going forward. This should enable the company to recycle its excess cash flow in other profitable and revenue-generating strategies.

Additionally, with the acquisition, Curtiss-Wright aims to enhance its prospects of further order inflows, fueled by its improved product range, thus supporting and meeting the evolving needs of the defense landscape. This, in turn, is likely to bolster its top line in the long haul.

Peer Moves

Acquisition is one of the popular strategies that companies engage in to scale up their operations and expand into new markets. In this context, Curtiss-Wright apart, defense companies that have lately been dynamically involving themselves in acquisition strategies to gain from the economies of scale and increase their market share are

In May 2022, Kratos Defense & Security Solutions (KTOS - Free Report) acquired Alabama-based Southern Research’s Engineering division for approximately $80 million.

The Zacks Consensus Estimate for Kratos’ 2022 sales suggests growth of 10.3% from the prior-year reported figure. The Zacks Consensus Estimate for KTOS’ 2022 earnings has been revised upward by 2.9% in the past 60 days.

In May 2022, TransDigm Group Incorporated (TDG - Free Report) announced that it completed its acquisition of DART Aerospace for approximately $360 million.

TransDigm’s long-term earnings growth is pegged at 24.3%. The Zacks Consensus Estimate for TDG’s 2022 sales suggests a growth rate of 12.8% from the prior-year reported figure.

In March 2022, CAE Inc. (CAE - Free Report) announced that it concluded the previously announced acquisition of Sabre’s Airline Operations portfolio for an enterprise value of $392.5 million.

CAE boasts a long-term earnings growth rate of 16.9%. The Zacks Consensus Estimate for CAE’s 2022 sales indicates an improvement of 18.7% from the prior-year reported figure.

Price Movement

In the past year, shares of Curtiss-Wright have risen 5.6% against the industry’s fall of 1.5%.

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Zacks Rank

Curtiss-Wright currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.