Tags: FLIR Systems | FLIR | Lockheed Martin | LMT | L-3 Communications | LLL | defense

FLIR Seeks Silver Lining in Defense Cuts

By    |   Wednesday, 29 Jun 2011 11:26 AM

Deep cuts in U.S. military budgets are looming. Already, Pentagon suppliers have tightened their belts and scouted out work outside the United States, especially in the Middle East and Asia. That strategy may suit FLIR Systems (FLIR), too. FLIR makes thermal imaging systems that are used by the U.S. government, industry, and security professionals. Government product backlogs are already dipping this year, while commercial ones are surging.

Commercial systems sales shot up 51 percent in the first-quarter. With this push, FLIR’s revenues rose 30 percent to $373.5 million versus $287.3 million a year ago. Earnings per share, however, dipped to 32 cents versus 35 cents. “Our Government Systems division was impacted by slower U.S. procurement,” explained FLIR CEO Earl Lewis, commenting on first-quarter results. The upshot: FLIR lowered its earnings per share estimates for 2011.

On the plus side, FLIR has higher net-income margins than rivals such as Lockheed Martin (LMT) and L-3 Communications (LLL). FLIR’s margins hover between 16.6 percent and 19.9 percent. Also, the thermal infrared imaging company has stacked up five years of positive cash flow.

Pentagon dependent

Analysts are solidly divided on FLIR’s prospects, though. Of the 16 analysts tracking the defense supplier, five have FLIR Systems as a strong buy, with three buys and eight holds.

Zacks Investment Research is maintaining its neural rating on FLIR, noting significant dependency on U.S. government agency contracts, despite extensive company competencies.

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Deep cuts in U.S. military budgets are looming. Already, Pentagon suppliers have tightened their belts and scouted out work outside the United States, especially in the Middle East and Asia. That strategy may suit FLIR Systems (FLIR), too. FLIR makes thermal imaging systems...
FLIR Systems,FLIR,Lockheed Martin,LMT,L-3 Communications,LLL,defense,stocks
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2011-26-29
Wednesday, 29 Jun 2011 11:26 AM
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