Firan Technology is firing on all cylinders, says Paradigm Capital

A better than expected fourth quarter is further conformation of Paradigm analyst Daniel Kim’s bullish take on Firan Technology (Firan Technology Stock Quote, Chart, News: TSX:FTG), says the analyst.

On Monday, Firan reported its Q4 and fiscal 2015 results. In the fourth quarter, the company earned $6.4-million on revenue of $18.74-million, a 14 per cent topline bump over the same period last year. CEO Brad Bourne characterized the year.

“The year 2015 saw consistent strong performance for FTG as a result of past investments in technology, positive impacts from past key new program wins, as well as the strengthening of the U.S. dollar,” said Bourne. “These record results are enabling us to report strong earnings while still investing in our future. As we look forward into 2016, we remain confident of our market position and our ability to continue to grow and perform. With a strong financial foundation, we are looking for ways to accelerate growth through investments in new development programs or acquisitions. We will also continue to invest in research and development across the corporation to improve our products, our processes and our ability to meet the future demands of our customers.”

Kim says Firan’s results beat his estimates across the board. He thinks there are several reasons why they can keep it up.

“Q4 was a substantial beat on all metrics, demonstrating clear fundamental strength in the business (capping out FY15 with 8.5% ROE and 7.8% ROIC),” says Kim. “The FY16/FY17 outlook is looking well supported on three fronts: 1) all key customers (particularly Airbus and Boeing) are bullish on platforms and volumes, coupled with increasing FTG content per airframe; 2) there is a geographical shift to Asia (up 25% y/y) as momentum grows with the China facility; 3) great pipeline with Rockwell Collins (COL-N, NR) resigning for greater activity; and 4) its control panel helicopter program ramping up in F17.”

In a research update to clients today, Kim maintained his “Buy” rating and one year target price of $3.50 on Firan Technology, implying a return of 46 per cent at the time of publication.