SAFRY - Safran: Industry Tailwinds Shifting Capital Productivity FCF Higher Rallying On Fundamentals
2024-02-06 05:53:19 ET
Summary
- Safran presents with attracting long-term economics for positioning against the aerospace and defense industry.
- Industry tailwinds have unlocked production advantages in turnover and at the margin, driving FCF for redistribution and growth of future earnings.
- SAFRY is rallying on strong fundamentals and, with its attractive economics, has the potential for outsized earnings growth.
Investment briefing
A Location to the industrial sector continues to present with a compelling risk reward calculus for top-down security selection in 2024 in our opinion. Readers of this channel will have seen the data presented in Figure 1, that shows the industrial sector holding 8% of the notional value of the market weighted S&P 500 index at Q3 2023, but posting 16% of projected earnings growth into Q3 2024. We look forward to updating at this data at the end of earnings season over the coming weeks.
Figure 1.
Now well into the new trading year the industrial sector has clipped a 72 basis point gain and is trading at the top of its 52-week range (Figure 2). The global risk appetite appears to be sound, and we have high beta sectors like communication services and technology also lifting the bid....
Safran: Industry Tailwinds Shifting Capital Productivity, FCF Higher, Rallying On Fundamentals