It's about time that Goodrich
While this is an aerospace stock that many investment professionals seemingly want to like, performance hasn't always merited that support and enthusiasm. So it was nice to see that some of the 30% improvement in the stock (from its lows in November) was merited by improving fundamentals.
Sales for the quarter were up more than 11%, with stronger growth in engine systems and electronic systems and relatively weaker performance in airframe systems. Sliced another way, sales of new equipment for commercial and regional/business aircraft were up 27% and 25% respectively, and aftermarket sales were up 16%, while the defense and space business was down modestly. On a less happy note, reported operating income was up just 9%, and the company has not yet started seeing strong margin improvements.
I think I've covered the basic thesis here in past pieces. Boeing
And that's not the only opportunity for Goodrich to grow. Not long ago it signed an agreement to help provide maintenance on JetBlue
So what, then, to make of this stock? Clearly I haven't been a major fan of this company. And frankly, while I applaud management for improving the return on invested capital, I'm not that keen on them now. I just think that you can get aerospace exposure in other ways (including companies like Eaton
Then again, if margins actually get moving in the right direction, there could be some meaningful cash flow potential here, and that could provide some lift. But proper Fools do their own due diligence and make their own decisions; just because it's not my favorite idea doesn't mean that it can't or won't work for you.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).