EDAC

Best-Idea EDAC Tech Reported Strong Third-Quarter Performance

by

Best-idea EDAC Tech (EDAC) reported excellent third-quarter results that exceeded our expectations. We are sticking with our conservative $10 per share fair value estimate and retaining our allocation in our Best Ideas portfolio. As followers of Valuentum know, EDAC Tech has been one of the biggest generators of alpha in our portfolio and continues to be one of our largest positions (at about 10%)—our cost basis is just over $4 per share. We were particularly pleased with its third-quarter results, as management mentioned the quarter would be slightly weaker, on average, on its second-quarter conference call. However, the third quarter was far from that. The firm’s top-line expanded an impressive 18%, while earnings per share came in at $0.19, which was … Read more

Best Idea EDAC Tech Rises 15%+ on Valuentum Report

by

It’s not everyday we come across such a massive mispricing in the market as that of EDAC Tech (EDAC) at these levels, but nonetheless we are amazed at the upside opportunity presented by this stock. As part of our process, we employ a discounted cash-flow model to arrive at a fair value estimate for every company within our equity coverage universe. In the case of EDAC Tech, a nano-cap aerospace supplier of precision components to jet engine makers, we think the shares are significantly undervalued at today’s prices of roughly $5 per share. Based on our DCF process, our fair value estimate for EDAC Tech is $10 per share (assuming a 9.4% weighted average cost of capital), and we reveal … Read more

Best Idea EDAC Technology Posts Excellent Second Quarter, Raising Our Fair Value

by

On June 6, we wrote a bullish piece on our outlook for commercial aerospace in coming years. In it, we outlined our take on EDAC Tech (EDAC), a supplier of precision engine components to the sector. Today, the firm posted fantastic second-quarter results, and we are raising our fair value estimate to $10 per share on the heels of stronger margin performance and backlog expansion. The stock is trading up over 50% since that June 6 article, and we include this name and other ideas in our Best Ideas Newsletter, which continues to outperform the market. We reproduce below our thoughts on EDAC Tech on June 6, which was trading just above $4 per share at the time: “…one micro-cap … Read more

How Profitable is Boeing’s 787 Dreamliner? Not Very.

by

This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277504-how-profitable-is-boeings-787-dreamliner-not-very With Boeing’s (BA) 787 Dreamliner in the final stages of testing, we thought it would be helpful to clarify the profitability of this program (or perhaps more appropriate, the lack thereof), at least in its early stages. The growth potential of this program has been well-documented, but the 787 platform’s profitability will be nowhere near what management had expected before it experienced the first of many delays of its Dreamliner.  We think investors should be made aware of just how much leeway Boeing has in determining earnings, and why Boeing is one of the more difficult firms for the analyst community to get their arms around due to the lack of transparency. We believe Boeing will set the initial 787 accounting … Read more

Sorting Through the Aerospace Supply Chain

by

This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273424-sorting-through-the-aerospace-supply-chain  As outlined in the previous two editions, The Future of the Narrowbody Market and How to Play the Upswing in Commercial Aerospace, expected deliveries of commercial planes are set to advance considerably in coming years. In this third edition, let’s dig into the valuation and potential upside of Precision Castparts (PCP), one of the best long-term plays on commercial aerospace demand. We’ll also dive into an interesting small-cap play and a compelling micro-cap opportunity in the aerospace supply chain. For new readers to this series of articles and analysis, let’s briefly review the trajectory of large commercial aircraft deliveries during the next several years. Aside from the fundamental drivers (replacement planes, … Read more

Boeing Declares Victory But Farnborough Disappoints

by

Image Source: Boeing By Brian Nelson, CFA Nearly a decade ago, Boeing (BA) and Airbus (EADSY) made some big bets on the future. On one hand, Boeing envisioned a world of increasing point-to-point travel requiring wide-body aircraft with ultra-fuel efficient economics, laying the groundwork for the blueprint of the 787 Dreamliner, a mostly-composite aircraft. Airbus, on the other hand, had a different view of the future. The European plane maker believed that air travel would be dominated by the hub-and-spoke system where massive planes would be needed to transport passengers between global hubs. It decided to build the massive A380 superjumbo. If Boeing had not already declared victory, it can probably do so now. In mid-July, Airbus announced that it … Read more