By: Tomas Ronolski - AllPennyStocks.com News

Thursday, March 28, 2013

The U.S. Commerce Department said on Tuesday that new orders for durable goods, or items from kitchen appliances to trains that are meant to last more than three years, advanced 5.7 percent in February after declining in January. The gains in the last month were largely fueled by resurgence in aircraft orders. Defense orders for core capital goods, or items that are used in the production of other goods, swelled $3.3 billion, or 68.0 percent, to $8.1 billion. The increase in orders of defense capital goods and aircrafts bodes particularly well for companies like Magellan Aerospace Corp. (TSX:MAL), a manufacturer of parts and assemblies for civil and defense aircrafts and helicopters, primarily in Canada, the U.S. and United Kingdom. In 2012, about 70 percent of Magellan’s revenue wes generated through sales in the commercial aircraft market.

Magellan supplies components to major manufacturers such as Boeing Co. (NYSE:BA), Lockheed Martin Corp. (NYSE:LMT) and Airbus.

On Wednesday, the Mississauga, Ontario-based company released its financial report for the fourth quarter of 2012, ended December 31. Magellan said that revenues for the quarter were $186.6 million, up 7.7 percent from $173.3 million in the year prior quarter. Net income surged to $2.1 million, or 38 cents per share, up by nearly 33 percent from $16.6 million, or 31 cents per share, in the fourth quarter of 2011. All figures were reported in Canadian dollars.

The majority of aerospace sales ($80.11 million) came from Canada during the quarter. The remaining revenues were split pretty evenly between the U.S. ($49.67 million) and Europe ($48.75 million). European sales gained the most year-over-year, in part because of Magellan’s acquisition of John Huddleston Engineering Ltd. in the third quarter.

The company’s power generation segment chipped-in with $8.04 million in sales during the quarter.

For the full year 2012, Magellan reported revenue of $704.6 million, ahead of the $691.4 million it reported for 2011, primarily because of greater revenue in the aerospace segment. Net earnings totaled $58.3 million, or $1.00 per share, in 2012, versus only $27.4 million, or 73 cents per share, in the year earlier.

“The year 2012 benefited from increased single and twin aisle production rates at Boeing and Airbus. Long term agreements secured with both Boeing and Airbus during 2012 confirmed Magellan's participation in key commercial aerospace programs and will serve to further augment the Corporation's strong positioning in this sector for the next decade,” the company said in today’s statement.

Shares of Magellan are extremely thinly traded, even though it is trading at a tiny P/E ratio. There is rarely a day that more than 50,000 shares exchange hands out of the 58.2 million shares outstanding (although there are only 12.64 million in the float, according to Yahoo Finance). Shares edged-up with yesterday's upbeat earnings, advancing so far 7 percent by mid-day to reach $3.70.

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