Rockwell Collins, Inc. (NYSE:COL) — This aerospace & defense company is one of the world’s largest makers of military and commercial avionics and electronics. They manufacture cockpit controls, communications and navigation systems, as well as in-flight entertainment systems.
COL stock is on a Sep 30 fiscal year. In fiscal year 2017, they are expected to report $5.49, and although that is a penny less than FY 2016, it is an increase by S&P from a prior estimate of $5.42. COL reported a December-quarter EPS of $1.20 which beat their estimate of $1.16.
The recent acquisition of B/E Aerospace increases COL’s share in the manufacture of cockpits and aircraft cabins and in the long term should add to the growth of COL. S&P projects FY 2018 sales to rise 4% and EBITDA margins of 24.3% in FY 2017 and 24.6% in FY 2018. S&P’s 12-month target price is $110 and is based on a price-to-earnings ratio of about 20X their FY 2017 EPS.
This estimate could prove to be conservative given improving military spending by the new administration in Washington.
COL recently broke from a resistance line at $95 on a cluster of “buy” signals from my proprietary indicator, the CBR. The line at $95 now becomes a support line, and on Monday, Rockwell Collins successfully tested that line, and by Thursday had jumped over $3.
MACD is turning up and is very close to issuing a “buy,” and volume indicates a balance of buyers since the stock’s low in October. On Dec. 15 the 50-day MA crossed above the 200-MA executing a long-term buy called a Golden Cross. Near- and long-term have turned favorable for COL, and so I suggest trying to buy it at $96 with a six-month trading goal of $115 for a proposed return of almost 20%.
Rockwell Collins pays a dividend of $1.32 for a dividend yield of 1.3%.
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