PwC Estimates Indicate FTG UndervaluedAviation Week & Space Technology will be publishing a report next week about the "tremendous amount" [their emphasis] of M&A activity currently taking place in the Aerospace and Defense sector. The Raytheon - United Technologies merger is just the latest (and certainly the largest) example of this trend. The highest level of M&A activity, however, is focused on much smaller entities including privately held companies, e.g., FTG's acquisition announced in April of a US-based circuit board company.
PwC estimates that EBITDA multiples for acquisitions in the A&D sector have increased to 14 times operating cash flow well above the 10X EBITDA levels that were prevalent prior to the 2008 financial crisis. This should be of particular interest to FTG shareholders as this would indicate, based on 12-month trailing EBITDA, an FTG share value of approximately $7.00 per share which is well in excess of the level at which the shares currently are trading. Furthermore, this $7.00 per share valuation is before taking into account the accretive boost FTG enterprise value will experience once the above mentioned acquisition is completed.