What Collins Tells Us About BombardierRockwell Collins is a big supplier of commercial and business jet avionics. As such it supplies the avionics for many Bombardier aircraft and, indeed, the aircraft of many of Bombardier's competitors.
So, what's going on with RC can offer some indication of what's going on in Bombardier's aerospace units, and I believe it is in our interest to follow major suppliers to Bombardier. That said, here's a few excerpts from Rockwell's recent Value Line report:
Rockwell Collins will likely struggle over the next several quarters. Due to the recent recession and elevated unemployment rate, passenger air tavel remains well below normal levels. As a result we believe airlines will continue to operate reduced flight schedules and keep part of their fleets grounded.
With Rockwell's retrofit electronics and other components will likely remain weak. In addition, RC derives a good portion of its revenues and profits from sales to Boeing . Over the past year, the aircaft manufacaturer has experienced material production delays, which led to increased inventory levels. We believe that until Boeing works through its inventory over the next year or so, it will order fewer components from dozens of suppliers, including Rockwell...
"On the bright side "The company's long-term prospects appear healthy. We believe that the U.S. economy will improve over the next several years. Passenger air travel ought to begin returning to normal levels, as well. Thus, flight schedules will probably increase and a number of carriers will be eager to upgrade and/or replace their aging fleets. In addition Boeing's inventory levels should come down, which which will lead to large orders for Rockwell's products.
The company is contracted to provide avionics components for Boeing's new 787 Dreamliner, and orders for this plane have already reached 876. An economic rebound should also spur demand for RC's business jet offerings, while the company's military contracts ought to continue fueling profits. In sum, we project share earnings to reach $4.65 by the 2013-to-2015 time frame..."
Rockwell Collins:
Financial Strengthh is rated at <B>A+</B>
Stock's Price Stability <B>85 </B>(high)
Price Growth Persistence<B> 95</B>
Earnings Predictability <B>90</B></i>