Ladish Co., Inc. (LDSH) announced it would be supplying parts for the Rolls-Royce Trent 1000 aircraft engines. The engines will be used in Boeing’s new 787 twin-engine Dreamliners purchased by Air China. Details of the agreement will also include a Ladish-Air China maintenance contract. Analysts have pointed to this deal to illustrate Ladish’s long-term financial stability and potential for growth.
Boeing’s Dreamliner has been the recent choice of many airline companies because of its fuel efficiency, speed and design. The Dreamliner is largely considered a superior choice to Airbus’ flailing A380. The A380, with its 500-800 seating capacity, is the largest commercial aircraft ever produced, but largest does not make it the best.
Ladish reported 2006 third quarter sales of $90.7 million. This marked a 40% improvement over the third quarter sales of 2005. The Company’s reported earnings per share of $0.45 for the third quarter of 2006 versus $0.23 in 2005; this is a 96% one-year improvement. This year’s sales growth is roughly 40%.
Company Profile:
The Ladish group of companies is largely involved in engineering, production, and marketing of forged and cast metal components primarily for jet engine, aerospace, and industrial machining markets. The company’s products include jet engine parts, missile components, and helicopter rotors. The company markets its products directly to the manufacturers of airplane and helicopter engines; it is also involved in the manufacture of parts used in satellites and marine turbines.
The Ladish precision metal working assets include forging, machining and tooling companies in Wisconsin (where it is headquartered), Oregon and Poland. CEO Comments: Ladish’s, CEO Kerry L. Woody, in an announcement related to the 3rd Quarter financial report stated the following: “We expect 2007 to reflect this strength with improved revenues and earnings. We are seeking opportunities to capitalize on this upturn to grow our business both internally and externally to better position our company for the future.
All of the operating units of Ladish are experiencing an improvement in business and profitability. We continue to be optimistic in the sustainability of the overall aerospace market. Our investment plans and established cost reduction programs remain focused on sustaining the profitability of the business and improving our cash position while serving the needs of our customers.”
A Potential Trade:
With the Ladish/Air China maintenance deal, Ladish’s stock price is potentially poised for some bullishness. Searching for January 2007 covered calls on PowerOptions Option Chain Tool identified the following trade:
| Ladish Co. Inc. (LDSH) $34.85 47 Days to Expiration | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Expiration/Strike | Opt. Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd |
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| UQOAG | 07 JAN 35.0 | $1.60 | 4.60% | 4.80% | 5.20% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The selected Ladish out-of-the-money covered calls stock option position provides over 4.5% of downside protection, a solid potential profit of 4.8% if unchanged or 5.2% if the stock options position is assigned and the potential return is due to occur in only 47 days.
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[tags]Rolls-Royce, Boeing, Dreamliner, Air China, Airbus, Wisconsin, Oregon, Poland, Kerry L. Woody, LDSH, Ladish Co. Inc., covered call investment strategy, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]