In a bid to boost operating synergy and focus, sensor systems maker FLIR Systems, Inc. (FLIR - Free Report) recently announced that it has reduced its business segments to half. The internal shake-up is in line with the company’s streamlining efforts to boost operational excellence.
Beginning with its first-quarter 2018 operating results, the company will report financial results in accordance with this new operating structure. Further, the company announced that Tom Surran, Senior Vice President and Chief Operating Officer, will step down from his position effective Sep 30, 2017.
The company has realigned six of its segments namely, OEM & Emerging Markets, Surveillance, Instruments, Security, Detection and Maritime into three units. The new segments will be called Government & Defense, Industrial and Commercial.
While the current Surveillance and Detection segment will be absorbed into the Government and Defense, Instruments, OEM and Emerging segments will go under the Industrial segment. In addition, current Maritime and Security segments will be a part of the newly formed Commercial segment.
FLIR Systems believe that creating a logical structure will help it to leverage its vertical integration as well as to focus on core markets. Restructuring activities undertaken by the company since 2013 have helped the company reap synergies and drive profitable growth combating headwinds like currency fluctuations and tough market conditions.
Quarter to date, FLIR Systems’ shares have returned 11.3%, outperforming the industry’s average gain of 9.3%. During the reported quarter, the Zacks Rank #3 (Hold) company’s solid execution and streamlined business has helped it drive improvements in backlog, adjusted gross margin, operating margin, net income and earnings per share.
We believe that strategic restructuring activities and solid backlog levels indicate the company’s resiliency, which will help it sail through difficult economic times and drive growth. Please note that brokers are on the sidelines for the stock as its earnings estimates have remained unchanged over the month. The Zacks Consensus Estimate for full-year 2017 has remained steady at $1.85 over the same time frame.
Stocks to Consider
Some better-ranked stocks in the industry are Engility Holdings, Inc. (EGL - Free Report) , Teledyne Technologies Incorporated (TDY - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) . While Engility Holdings and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Huntington Ingalls carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Engility Holdings has a striking earnings surprise history for the trailing four quarters, beating estimates all through. It boasts an average positive surprise of 23.5%.
Teledyne Technologies has an average positive surprise of 36.1%, beating estimates all through.
Huntington Ingalls has an average positive surprise of 8.6% over the trailing four quarters, beating estimates twice for as many misses.
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