When last I wrote on aerospace company Goodrich (NYSE:GR) in February, the stock was trading for around $35. Today as I write, the stock is around $36. Hey, what gives? Isn't this supposed to be a good time for aerospace? Actually, it has been a pretty good year for Goodrich, but a very sharp reaction to the company's disappointing guidance this morning has turned back the clock on a lot of the year's gains. The stock is down another 2% today after falling sharply yesterday. Ouch.

For the company's fiscal third quarter, sales rose 18% year over year on strong airframe- and engine-related revenue. While revenue growth from the electronics business lagged the overall number, 14% growth isn't exactly a bad performance.

But the margin side of the business didn't do quite as well. Although operating income was up 25%, and the company did OK relative to analyst expectations, the operating margin improved less than 1%. Looking at the operating segments, operating income actually declined in the airframe and electronics businesses, although it was up nicely in the engine business.

Cash flow performance was also not exactly scintillating. Operating cash flow was down about 20% from the year-ago level in the third quarter and, even subtracting for higher pension contributions, exhibited little growth. Furthermore, annualizing this quarter's return on invested capital suggests a number in the vicinity of 7.5% -- better than the average over the past few years, but likely still not above the company's cost of capital.

Margins and cash flow performance weren't stellar, but it seems that management guidance is what really led to the tailspin in Thursday's trading. While the company indicated that operating income from continuing operations should grow by double digits next year, there will be some negative impacts from pension expenses, foreign exchange, and equity compensation. The company's estimate of a $0.34 charge to earnings next year surprised analysts. It strongly suggests that prior analyst estimates of 20% earnings growth next year are no longer achievable.

This is a tough company for me to get really excited about. While business is improving for customers like Airbus and Boeing (NYSE:BA), Goodrich hasn't quite seen the leverage on the bottom line just yet. I do, however, expect the company's growth to improve as the commercial aerospace market improves, and perhaps even some additional long-term space business if NASA is serious about a moon program. Nevertheless, this is still a cyclical company that, unlike United Technologies (NYSE:UTX) or Lockheed Martin (NYSE:LMT), probably isn't currently earning back its cost of capital.

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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).