US stock futures edge lower after S&P 500 hits record high; PCE data in focus
On Tuesday, Bernstein SocGen Group maintained a positive stance on StandardAero Inc (NYSE:SARO), reiterating an Outperform rating and a $30.00 price target. The aerospace company’s fourth quarter performance surpassed expectations, with revenues reaching $1.41 billion, exceeding the consensus estimate of $1.36 billion and Bernstein’s projection of $1.37 billion. According to InvestingPro data, StandardAero has built a substantial market presence with a market capitalization of $8.8 billion, though current analysis suggests the stock may be trading above its Fair Value. Adjusted EBITDA also outperformed, coming in at $186 million compared to the anticipated $170 million, and margins were reported at 13.2%, which was 0.9% higher than estimated. InvestingPro analysis reveals that while the company maintains strong liquidity with a current ratio of 2.11, it faces challenges with relatively weak gross profit margins of 14.25% over the last twelve months.
The company’s Engine Services segment was a significant contributor to the strong quarter, with revenues of $1.25 billion that topped Bernstein’s estimate of $1.22 billion. This segment’s growth was driven by a 36% year-over-year increase in commercial aerospace end markets and an 11% rise in business aviation. However, this was slightly offset by a 1% decline in military/helicopter end markets due to the grounding of V-22 aircraft. The segment’s adjusted EBITDA stood at $160 million, surpassing the expected $151 million, contributing to the company’s total last twelve months EBITDA of $579.15 million.
StandardAero’s Component Repair Services also reported favorable outcomes, with revenues of $164 million, slightly above the $159 million forecast. This segment’s adjusted EBITDA was $44 million, which was higher than the predicted $37 million. These results reflect the company’s robust performance and the strength of the aftermarket for midlife aircraft.
The analyst highlighted the CF34-8 engine as an important revenue source for StandardAero and projected that the biggest source of growth in 2025 would come from the expansion of the CFM56 engine services. Long-term growth is anticipated from the company’s involvement with the LEAP engine, indicating a sustained positive outlook for the aftermarket segment.
In other recent news, StandardAero Inc. reported a 22% increase in revenue for Q4 2024, reaching $1.4 billion, despite a negative earnings per share of -$0.04. The company also achieved a full-year revenue of $5.192 billion, marking a 15% increase. Looking ahead, StandardAero projects 2025 revenue between $5.8 billion and $5.95 billion, with adjusted EBITDA expected to range from $770 million to $790 million. JPMorgan maintained an Overweight rating on StandardAero, highlighting a slight outperformance in revenue and adjusted EBITDA, but noted concerns about the company’s cash conversion. UBS raised its price target for StandardAero from $27 to $28, maintaining a Neutral rating, and cited robust revenue growth driven by strategic investments. These developments underscore StandardAero’s focus on expanding market share in key engine markets and its strategic investments in long-term growth opportunities.
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