It hasn't been the smoothest ride for aerospace companies, but France's Safran (OTCPK:SAFRY) is nevertheless worth a closer look. Safran is a tier one supplier in the aerospace market, and through its alliance with General Electric (NYSE:GE), a leading player in narrowbody aircraft engines. While the launch of a new engine program will pressure margins in the short term, aftermarket sales should start improving and management seems focused on removing the company from underperforming business lines.
The sale of the
security business is going to bring a lot of cash to Safran and there
are still concerns about what management will do with that money.
Although management hasn't sounded particularly eager for M&A, and
there aren't many deals out there that would seem to really improve the
company, the Street is still batting around various names as potential
targets. While this potential M&A is a significant swing factor, mid
single-digit revenue growth and improving margins can drive a fair
value more than 10% better than today's price, making these shares worth
a closer look.
Investors/readers should note that Safran's ADRs
are rather liquid, and while the home exchange shares are even more
liquid, there should be adequate liquidity with the ADRs for most
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Safran Building Toward Better Days