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Alliant Rises on Bushnell Buy & Q2 Earnings

Zacks Equity Research

The shares of Alliant Techsystems Inc. (ATK), the aerospace and defense products and service provider, moved higher thanks to the completion of acquisition of Bushnell Group Holding Inc. on Nov 4 and strong second quarter fiscal 2014 results released on Nov 7. The share price has gained 3.9% from Nov 4 to end at $115.15 on Nov 8.

The Bushnell deal was first announced on Sep 5, 2013. The addition of this leading global designer, marketer and distributor of branded sports optics will expand the customer base and operational reach of Alliant’s Sporting group division.

Bushnell Group had estimated calendar year 2013 revenues to touch $600 million. The acquisition will provide Alliant access to more than 10,000 customer accounts of Bushnell in more than 90 countries worldwide. Alliant expects the acquisition to be accretive to earnings by $1.00 per share by fiscal 2016.

We believe the acquisition is well timed as Alliant is doing well on the operational front. Alliant has surpassed the Zacks Consensus Estimate in the last 11 quarters and has the fundamentals in place to keep the earnings streak alive.

The company reported second quarter fiscal 2014 pro forma earnings of $2.82 per share, up 50.0% from the year-ago period. Lower interest expense and solid performance by the Sporting business led to the earnings upswing. Alliant’s second quarter fiscal 2014 revenue was $1,142.4 million, also exceeding the year-ago figure by 6.8%. Revenue increased on the back of Aerospace and Defense and Sporting Group sales, partially offset by a decline in contribution from Defense Group.

The company was also able to lower its long-term debt level in the first six months of fiscal 2014, which has lowered its interest burden by 15% year over year to $15.2 million.

Alliant presently has a Zacks Rank #1 (Strong Buy). Other operators in the sector also doing well include Exelis Inc. (XLS), Teledyne Technologies Inc. (TDY) and TransDigm Group Inc. (TDG), each with a Zacks Rank #2 (Buy).

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