Why Is RLI Corp. (RLI) Up 3.4% Since Last Earnings Report?
Viasat Inc. VSAT recently augmented its footprint in the U.K. defence market with the acquisition of Horsebridge Defence and Security for an undisclosed amount. The transaction is likely to extend its long-term business relationship with the country’s Armed Forces and will enable it to provide superior support system for several Ministry of Defence programs in the country.
Based in Cheltenham, Horsebridge Defence and Security offers system integration and support of deployable secure networks for transmission of sensitive data and classified information. Leveraging its extensive sector knowhow along with a rich experience of military requirements and its operating environments, the firm effectively delivers mission-critical ground-based communication networks and services.
Operating under Kestrel II-branded services portfolio, Horsebridge Defence and Security has created a niche for itself through successful delivery of a high-capacity ground network for a specific operational mission. The Kestrel II portfolio offers a plethora of secure network products, solutions and services specifically tailored for the U.K. defence requirements and are continuously upgraded to stay at the forefront of technology.
The transaction will facilitate Horsebridge Defence and Security to gain access to Viasat's full communications portfolio in satellite communication and Link 16 mobile networking solutions along with its cybersecurity and information assurance capabilities to better serve the military. This, in turn, will enable it to create new secure communications and mobility platforms that leverage high-capacity mobile networks with accredited secure voice, video and messaging services for a mobile military force.
The acquisition is a strategic fit for Viasat with complementary product portfolio and cultural match. The deal will further help the company to extend commercial, military or emergency service networks to the tactical mobile edge. However, the acquisition is not expected to impact its non-GAAP earnings guidance for fiscal 2019.
Viasat maintains a leading position in the satellite and wireless communications market. With the rapid proliferation of the smartphone market and subsequent usage of mobile broadband, the user demand for coverage speed and quality has increased, which is fuelling the demand for network tuning and optimization to maintain high data traffic.
Encouragingly, Viasat’s blue-chip customer base, which comprises the Department of Defence, civil agencies, allied foreign governments, satellite network integrators as well as large communications service providers and enterprises, add to its strength. The company’s Government Systems is acting as a major profit churner. Moreover, the impressive traction of Viasat 1-bandwith — the company’s first communication satellite and the world's most cost-effective satellite bandwidth — has been supporting the government and satellite business as well.
Over the past three months, Viasat has incurred a loss of 14.4% against the industry 1.9% growth. It remains to be seen whether this acquisition can boost the shares of the company.
Viasat currently carries a Zacks Rank #3 (Hold). Some top-ranked stocks in the same space are Comtech Telecommunications Corp. CMTL, sporting a Zacks Rank #1 (Strong Buy), and Motorola Solutions, Inc. MSI and Ubiquiti Networks, Inc. UBNT, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech Telecommunications has a long-term earnings growth expectation of 5%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 123.7%.
Motorola has a long-term earnings growth expectation of 8%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 12.1%.
Ubiquiti Networks has a long-term earnings growth expectation of 18.6%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 8.9%.
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