Thursday, May 9, 2019

IEC Electronics (IEC)

Can margins keep up with this organic growth machine?

IEC Electronics Corp. provides electronic manufacturing services (EMS) to technology companies in the United States. It involves in the custom manufacture of circuit cards, system level assemblies, and an array of custom cable/wire harness assemblies.

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Delivering Consistent Organic
  Growth. During Q2, IEC generated $37.3 million of revenue for a third consecutive quarter of sequential organic growth. Revenue for the quarter modestly beat our expectations of $37.0 million and was a 17.4% increase over Q2 last year. This consistent top line growth can be attributed to the successful business development efforts initiated two years ago when the then new management team began to rebuild the sales funnel.
• Temporary Headwinds Impact Margins. Quarterly gross margins decreased to 12.3% down from 15.1% last year. Factors contributing to this decrease included: unusual tariff related costs, product mix, increased staffing, and costs related to electronic component sho… 

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Thursday, May 9, 2019

DLH Holdings Corp. (DLHC)

Will Recent Business Trends Continue to be Favorable?

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offer services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of defense and other government agencies.    

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Update on 2H19. 1H19 results were somewhat constrained by a delay in RFPs as a result of the government shutdown. The pace of RFPs is picking up but it is unlikely any awards will have a material impact on 2019 results. Management remains upbeat about new awards in the second half of the year.
• Multiple Organic Growth Opportunities. DLH stands to benefit from strong budget and growth opportunities, such as a greater focus on leveraging data analysis to improve he… 

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Wednesday, May 8, 2019

DLH Holdings Corp. (DLHC)

Are Acquisitions on the Horizon?

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offer services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of defense and other government agencies.

   

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Reports 2Q19 Results. Revenue for the quarter came in at $33.8M, down slightly year-over-year, and below our $35 million estimate. EBITDA came in at $2.9 million and EPS $0.10. We were at $3.25 million and $0.13. Gross margin of 23.9% was ahead of our 23.1%, while operating margin of 6.9% was modestly below our 7.3% estimate.
• Quarterly Highlights. The y-o-y revenue decline was due primarily to the timing of workload volume on HHS contracts. The improvement in direct expense relates to decreased professional service and travel cos…

  
  

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Wednesday, May 8, 2019

KeyW Holding Corporation (KEYW)

Does First Quarter Miss Matter?

KEYW Holding is a provider of mission-critical cybersecurity, cybersuperiority, and geospatial intelligence solutions to U.S. government defense, intelligence, and national security agencies. Its solution includes collection, processing, analysis, and dissemination of intelligence information in cyberspace and geospace domains. 

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• 1Q19 Results. KeyW reported revenue of $113.8 million, adjusted EBITDA of $8.8 million, and a GAAP net loss of $0.08 per share. We were at $122 million, $10.4 million, and a net loss of $0.03 per share, respectively. Revenues were anticipated to decline due to the ending of the flight services contract but a push out of certain product revenue caused the miss. Notably, these product revenues are expected to be captured in the second and third quarters.
• Business Development. First quarter awards were $87 million, with the bulk, 79%, from new business and base growth. Quarter-end backlog was flat at $1.1 billion. Trailing twelve month win rate remained relatively unchanged at 48%. The Company continues to expect several of the $100 million opportunities to be awarded over the next several quarters…
  
  

  
  
  

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Wednesday, May 8, 2019

Vectrus Inc. (VEC)

Can Vectrus Reach Its $2.5 Billion Revenue Goal?

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• 1Q19 Results. Vectrus reported above expected revenue of $325.9 million in the first quarter, but EPS of $0.62 ($0.69 adjusted) was below expectations. We had forecast $321 million and $0.77, respectively. Vectrus saw particular strength in its European and Middle Eastern
  markets, which more than offset a weaker U.S. Higher expenses were behind the
  EPS miss.
• Backlog Remain Strong. The Company ended the quarter with $1.1 billion of funded backlog, up 60% sequentially. Book-to-bill in 1Q19 was 2.0x. Pr… 

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Tuesday, May 7, 2019

Ducommun Incorporated (DCO)

Commercial Aerospace Still a Positive…For Now.

Ducommun Inc is a leading global provider of engineering & manufacturing services for high-performance products & high-cost-of failure applications used primarily in the aerospace and defense, industrial, medical & other industries. 

 

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Commercial Aerospace Drives Top
  Line Beat. First quarter revenue was 14.7% higher than last year at $172.6
   million, meaningfully beating our expectations of $160 million. Commercial aerospace applications, namely the Boeing 737 platform, drove the year-over-year revenue increase contributing an additional $15.7 million more than in Q1 2018.
• Margin Enhancement Across the
  Board. Gross, adjusted EBITDA, and operating profit margins of 20.7%, 12.6%, and 3.5% were all a meaningful improvement over last year’s first quarter margins of 17.8%, 9.6%, and 3.5%, respectively. This enhanced profitability can largely be attribut… 

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Thursday, May 2, 2019

Albany International (AIN)

What’s in management’s secret recipe for margin enhancement?

Albany International Corp. is a textiles and materials processing company. The Company operates through two segments: Machine Clothing (MC) and Albany Engineered Composites (AEC). Its MC segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, nonwovens, fiber cement and various other industrial applications. 

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Profitability Boost. In Q1, AIN saw meaningful improvements in profitability, increasing gross profit, operating profit, and adjusted EBITDA over Q1 last year by 18%, 135%, and 22.3% respectively. These improvements were largely driven higher net sales, as well as, labor productivity gains and overall equipment effectiveness improvements.  
• Additional Guidance Provided. Management updated the previously provided 2019 guidance with enhanced details. Notably, managem…

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Tuesday, April 30, 2019

Comtech Telecommunications (CMTL)

What Will the New Contract and Acquisition Mean?

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. 

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating. 

• Awarded New Contract. Comtech
  announced yesterday that it has been awarded a five-year contract valued in
  excess of $100 million to develop, implement, and operate a Next-Generation 911
  emergency communications system for a Northeastern state. We believe the state
  to be Massachusetts where General Dynamics had a major contract. 
• Acquires NG-911 Business. In
  conjunction with the award, Comtech also announced the acquisition of the state
  and local government NG-911 business from General Dynamics. Coming on the heels
  of the Solacom acqui…
  
  
  
  
  
  
  
  

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Tuesday, April 23, 2019

KeyW Holding Corporation (KEYW)

Could It Go Higher?

KEYW Holding is a provider of mission-critical cybersecurity, cybersuperiority, and geospatial intelligence solutions to U.S. government defense, intelligence, and national security agencies. Its solution includes collection, processing, analysis, and dissemination of intelligence information in cyberspace and geospace domains.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating. 

• Announces Acquisition. KeyW yesterday morning announced it has singed a
  definitive merger agreement to be acquired by Jacobs Engineering (NYSE:JEC:Not
  Rated) for $11.25 per share in cash. The transaction has an enterprise value of
  $815 million, net of tax assets.
• Significant Premium. The
  $11.25 represents a 43% premium to KeyW’s closing stock price on April 18th and
  is above our 12-month price target of $10.50 per share. The merger
  consideration represents a 16.7x multiple on our 2019 adjusted EBITDA estimate
  and 15.2x our 2020 adjusted EBI…
  

  
  
  
  
  

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Wednesday, April 17, 2019

Vectrus Inc. (VEC)

What’s Next Following A Big Win?

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• LOGCAP V Awards. Friday
  evening, the U.S. Army Contracting Command-Rock Island awarded four ID/IQ
  Multiple Task Order Contracts for LOGCAP V. Vectrus was awarded contracts for
  the CENTCOM and PACOM areas. The CENTCOM award includes Vectrus’s current
  K-BOSSS business. This is a significant positive development for the
  Company. 
• Stock Responds Favorably. On
  Monday, on the heels of the weekend announcement, VEC shares jum…
  

  
  
  
  
  

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Two crashes too many for the Boeing 737 MAX

(Note: companies that could be impacted by the content of this article are listed at the base of the story (desktop version). This article uses third-party references to provide a bullish, bearish and balanced point of view; sources listed in the “Balanced” section)

On March 10^th, Ethiopian Airlines Flight 302 experienced problems shortly after takeoff, struggled to ascend at a stable speed, and then crashed killing all 157 people on board. This follows the disturbingly similar incident that occurred last October in Indonesia when Lion Air Flight 610 crashed shortly after takeoff killing all 189 passengers. In both instances, the pilots were flying a brand-new Boeing 737 MAX.

The 737 MAX is the fastest-selling airplane in
Boeing (BA) history with about 5,000 orders from more than 100 customers
worldwide. The model has completed thousands of successful flights and was
widely considered by industry experts to be a safe aircraft. Nevertheless, following
the crash of Flight 302 the U.S. Federal Aviation Administration (FAA) moved to
temporarily ground the entire global fleet of 371 Boeing 737 MAX aircrafts. On Friday
April 5^th, Boeing’s CEO Dennis Muilenburg acknowledged
that both incidents were caused by the same malfunction and accepted
responsibility for the crashes saying, “We own it”. Boeing says the malfunction
that caused the crashes can be fixed, but will it restore the public’s faith in
air travel?

Monday, April 1, 2019

Albany International Corp. (AIN)

New CFO appointment: What does it signal?

Albany International
Corp. is a textiles and materials processing company. The Company operates
through two segments: Machine Clothing (MC) and Albany Engineered Composites
(AEC). Its MC segment supplies permeable and impermeable belts used in the
manufacture of paper, paperboard, nonwovens, fiber cement and various other
industrial applications. 

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.  

• Management
  Update. After market close last Friday, AIN announced the that
  its Board of Directors appointed Stephen Nolan as CFO and Treasurer, effective
  today. Mr. Nolan succeeds John Cozzolino, who had served as CFO and
  Treasurer since 2011. 
• New CFO
  Background. Prior to joining AIN, Mr. Nolan served as CFO at
  Esterline, where he facilitated its sale to TransDigm. He also served as CFO
  for Vista Outdoor, which he helped spin-off from Alliant Techsystems (ATK). He
  also worked on the merger of ATK and Orbital Sciences to create Orbital ATK.
  Before those positions, Mr. Nol…
  

  
  
  
  
  

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Monday, March 25, 2019

Information Services Group (III)

What Are Recent Management Actions Indicating?

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Stepping into the market. In
  a flurry of Form 4 filings, the top 3 III executives added to their already
  substantial stock holdings through the purchase of III shares on the open
  market. In total, CEO Michael Connors added 40,000 shares at prices in the
  $3.70-$3.73 range, CFO David Berger added 2,050 in the $3.67-$3.79 range, and
  Vice Chairman Todd Lavieri added 13,500 in the $3.69-$3.79 range.
• It’s been awhile. Friday’s
  Form 4 filings were the first open market purchases by CEO Connors since August
  2017, when Mr. Connors added 13,514 shares over a series of purchases in the
  $3.60-$3.70 range. Mr. Lavieri has a very limited Form 4 filing history, while
  it would appear this is the first open mar… 

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