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Raven Industries, Inc. RAVN has managed to impress investors with its recent growth momentum driven by its broad-based growth across its segments and solid market potential for its core technology. The company is also gaining traction from its Aerostar segment, which comprise stratospheric balloons, radar systems, and aerostats. Buoyed by the robust performance, Raven expects to beat prior-year quarter’s sales and adjusted operating income in fiscal 2019.
Moreover, shares of Raven have outperformed its industry in the past six months, reflecting investor optimism surrounding the stock. While the company has gained 9.9%, the industry declined 9.2%. Raven also enjoys a strong foothold across markets and has several growth drivers working in its favour.
Given this backdrop, let’s delve deeper to find out the key factors that make this Zacks Rank #1 (Strong Buy) company an attractive proposition for investors right now.
Factors to Consider
For fiscal 2019, Raven expects to outpace sales and adjusted operating income figures registered in the prior year. In applied technology, the company is increasing market share through technological advancements. Through sustained funding of key R&D projects over the last few years, the company also introduced two significant products — Hawkeye nozzle control system and next-generation rate control system. Notably, these products are getting favorable customer feedback and generating strong demand, thus adding to the company’s strength.
Moreover, Raven’s focus on launching products and technologies enables it to gain a competitive advantage over peers. Of late, the company’s new products are consistently gaining traction, particularly through original equipment manufacturer (OEM) channel. Also, it remains optimistic about the market opportunity for its core technology. This apart, Raven is evaluating strategic acquisitions and continues investing in additional manufacturing capacity, research and technology development activities that would augment core product lines.
Meanwhile, the company’s Aerostar segment continues to grow across many of its platforms including stratospheric balloons, radar systems and aerostats. Notably, over the past few quarters, the pipeline of business opportunities for the company’s Aerostar segment has improved significantly. For instance, in first-quarter fiscal 2019, sales at the segment recorded an increase of 13.5% year over year driven by growth across core product lines. The company continues to advance in building the market for its stratospheric technology as well.
Furthermore, the company’s considerable advancements in balloon duration continue to support the progress on Google's Project Loon and NASA's mission are impressive. In addition, Raven is developing new stratospheric balloon solutions for other new customers. In fact, its pipeline is much stronger nowadays, mirroring improved sales for fiscal 2019 and beyond.
Other Stocks to Consider
Some other top-ranked stocks from the same space are Federal Signal Corporation FSS, Crane Company CR and Honeywell International Inc. HON. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Federal Signal delivered an average positive earnings surprise of 16.1% in the trailing four quarters, surpassing estimates in each.
Crane has an excellent earnings surprise history, with an average positive surprise of 2.1%, exceeding estimates in each of the trailing four quarters.
Honeywell pulled off an average positive surprise of 1.5%, surpassing estimates in each of the trailing four quarters.
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