LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.

Today I am looking at Meggitt (LSE:MGGT) (NASDAQOTH:MEGGF) to determine whether you should consider buying the shares at 480 pence.

I am assessing each company on several ratios:

Price/Earnings (P/E): Does the share look good value when compared against its competitors?

Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?

Yield: Does the share provide a solid income for investors?

Dividend Cover: Is the dividend sustainable?

So let's look at the numbers:



3-Year EPS Growth

Projected P/E



3-Year Dividend Growth

Dividend Cover

Meggitt plc








The consensus analyst estimate for next year's earnings per share is 38.2 pence (11% growth) and dividend per share is 12.7 pence (8% growth).

Trading on a projected P/E of 12.3, Meggitt appears to be valued the same as its peers in the aerospace and defense sector, which are currently trading on an average P/E of around 12.5.

Meggitt's P/E and double-digit growth rate give a PEG ratio of around 1.1, which implies the share is fairly priced for the near-term earnings growth the firm is expected to produce.

At 2.5%, the dividend yield is slightly more than the sector average of 2.1%. In addition, Meggitt has a three-year compounded dividend growth rate of 28%, implying the yield will continue to stay above that of its peers.

Additionally, the dividend is around three times covered by earnings, giving Meggitt plenty room for further payout growth.

So, is now the time to buy Meggitt?
Meggitt is a world-leading engineering group that boasts an illustrious history of manufacturing components for the aerospace, defense and energy markets.

Meggitt's experience and heritage lead me to believe the company enjoys a significant edge over its competitors. Indeed, while the majority of the company's peers are struggling with the uncertain economic environment and falling government defense spending, Meggitt's earnings have continued to grow.

That said, Meggitt's management has predicted that spending cuts in the U.S. will have an effect on the company's revenue this year. However, the company predicts this impact will be limited and is only likely to reduce revenue by about 2% during 2013 and 2014.

Furthermore, 44% of Meggitt's revenue comes from the civil aviation market, where there is still a strong demand for planes and components. I believe growth in this sector should more than offset the reduction in defense-related revenues.

Overall, Meggitt's solid rate of growth should continue and the company currently has a reasonable valuation compared to its sector peers. So, I feel now looks to be a good time to buy Meggitt at 480 pence.

More FTSE opportunities
As well as Meggitt, I am also positive on the FTSE 100 share highlighted within this exclusive free report.

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In the meantime, please stay tuned for my next verdict on a FTSE 100 share.


Motley Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.