) to buy from hold.
Analyst Sam Pearlstein says the aviation-parts maker expects 3% to 5% commercial aftermarket growth in 2004, but believes aftermarket sales could be up 5% to 7%. He estimates that every 1% change in commercial aftermarket sales translates into about 3 cents in earnings per share for Goodrich. Also, Pearlstein says commercial margins are improving, independent of cycle; the commercial, original equipment build rates are flattening; and there's continued double-digit growth in the military and space business.
Pearlstein sees 90 cents 2003 earnings per share, and $1.40 in 2004. He sees $1.80 earnings per share in 2005. Also, Pearlstein sees $250 million in 2005 free cash flow, up from the $200 million to $225 million 2004 estimate. He set a $35 target, which is based on a 6% estimated free cash-flow yield for 2005.