SAF FP
SAFRAN SA
Industrial/Transportation
11/22/2016
Presented
| Date | 11/16/2016 |
| Price | €61.88 |
| Market Cap | $0.00B |
| Ent Value | $0.00B |
| P/E Ratio | 16.24x |
| Book Value | €16.79 |
| Div Yield | 0.03% |
| Shares O/S | 0.00M |
| Ave Daily Vol | 887,300 |
| Short Int | N/A |
Current
| Price | €208.40 |
| Market Cap | $97.57B |
| Safran SA engages in the design, manufacture, and sale of aircraft, defense and communication equipment and technologies. It operates through the following segments: Aerospace Propulsion, Aircraft Equipment, Defence, Security, and Holding Company and Other. The Aerospace Propulsion segment designs, develops, produces, and markets propulsion systems for commercial aircraft; military transport; training and combat aircraft; rocket engines; civil and military helicopters; tactical missiles and drones. The Aircraft Equipment segment specializes in mechanical, hydromechanical, and electromechanical equipment. The Defence segment includes all businesses serving naval, land, and aviation defence industries. The Security segment provides solutions developed by Group to increase the safety and security of travel, critical infrastructure, electronic transactions, and individuals. The Holding Company and Other segment handles the company's activities and holding companies in various countries. The company was founded on August 16, 1924 and is headquartered in Paris, France. |
Publicly traded companies mentioned herein: Airbus Group SE (ARI FP), Boeing Co/The (BA), Safran SA (SAF FP), Zodiac Aerospace (ZC FP)
Highlights
The presenter said that he has a long history of investing in Safran (SAF FP), and after selling out of his position at ~$68 in late 2015 he has reestablished a long position. With the stock at €62 the risk/ reward is favorable because earnings growth has the potential to be “explosive” in 2018 and 2019 as maintenance revenue on engines sold 5-10 years ago starts to ramp. Additionally, Safran is transitioning from its successful CFM56 engine to a new LEAP engine and there is some concern about the impact that may have; however, the presenter is not worried. There is also a margin expansion opportunity, a potentially meaningful FX benefit that is not being fully factored into expectations at this time, and optionality around M&A following the sale of Safran’s security business (~11% of revenue). If the presenter’s estimates ultimately prove to be accurate, the company could see EPS jump from €3.85/ share this year to €5/ share in 2018 (versus the Street’s €4.50 estimate) and €6/ share in 2019. At 15x one-year forward EPS estimates the stock price could rise to €90 in 12 - 18 months.
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