Goodrich Gets Arabian Contract - Analyst Blog

Goodrich Corporation(GR) has been selected by Air Arabia for support of nacelles and thrust reversers for the airline's fleet of more than 50 Airbus A320 aircraft powered by CFM56-5B engines. The 10 year contract will be managed by Goodrich's Dubai facility in the United Arab Emirates (UAE). Air Arabia is a low-cost carrier based in Sharjah, UAE.

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 Company (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 is a global supplier of components and systems for communications and avionics. Most of its products are sold to both government and commercial customers. This facilitates the use of government funding for development of its products for the dual-end market. This market leads to higher volume sales, creating economies of scale that help win cost-sensitive government contracts.

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.

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 #1 Rank (Strong Buy) stocks like TransDigm Group Incorporated (TDG), and Astronics Corporation (ATRO).