Goodrich Wins Airbus Contract - Analyst Blog

Goodrich Corporation (GR) has been selected by European aircraft manufacturer Airbus to provide the main landing gear for its A350-1000 variant of the A350 XWB series of aircraft.

The A350-1000 is the largest of the three variants of the A350 XWB series. It is designed to carry up to 350 passengers and with a fully-loaded fuel-tank has a range of up to 8,000 nautical miles. The contract is expected to generate more than $2 billion in original equipment and aftermarket revenue for Goodrich.

Airbus' A350 XWB aircraft is pitted against The Boeing Company's (BA) 777 and 787 series of airplanes. Goodrich will cover the design, test, manufacture and in-service support for the main landing gear. The work represents a global effort involving the company's facilities in Canada, U.S., Poland, India and France.

In addition to the main landing gear, Goodrich is also providing the A350 XWB series with nacelle and thrust reverser system, wheels and carbon brakes, air data system and ice detection system, external video system and cabin attendant seats.

Goodrich manufactures complete landing gear systems for commercial, general aviation and defense aircraft. However, the company has to compete with a number of U.S. and foreign companies that are both larger and smaller in terms of resources and market share.

Its major competitors in this space include Messier-Dowty, a subsidiary of French conglomerate SAFRAN; privately-owned German company Liebherr-Holding GmbH; GE Aviation, a subsidiary of General Electric (GE) among others.

Based in Charlotte, North Carolina, Goodrich supplies components, systems and services to the commercial and general aviation airplane markets. The company also supplies systems and products to the global defense and space markets. Businesses include manufacturing, service and sales, which are carried out in various locations throughout the world.

Goodrich's products and services are sold in North America, Europe and Asia. Goodrich operates three business segments – Actuation and Landing Systems, Nacelles and Interior Systems and Electronic Systems.

Goodrich Corporation's geographically diverse customer mix, strong balance sheet, incremental dividend-paying history, ongoing share repurchase program and a relatively cheap earnings-based valuation support our bullish outlook for the company. In October 2010, the company raised its quarterly dividend by 7% from 27 cents to 29 cents per share.

However, this is offset by the depressed fortunes of the business jet market, high research and development overheads and regulatory risks. We currently have a market Neutral recommendation on the Zacks #3 Rank (Hold) stock. Our current favorites among aerospace-defense equipment suppliers are the Zacks #2 Rank (Buy) stocks like AAR Corporation (AIR), and Astronics Corporation (ATRO).

 
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