Novice Investing - Armor Holding Hit Its Target

Date: Monday 01st 2008f December 2008 05:03:53 PM

Armor Holding Hit Its Target - 10/21/2005

By: Novice Investing Staff

Armor Holdings Inc. (AH) has been trading at $ 44 level for a while now. Back in June, we calculated the fair value of Armor Holdings at $ 43.16 per share. So, finally, Armor Holdings trades at its full fair value. Has anything changed since then? Well, things look better now. It reported earnings last night and it raised guidance for the year. For 2006, it now expects earning of $ 3.55 as opposed to analyst estimate of $ 3.39.

There are some concerns with Armor Holding's earning power, though. First, it is in the highly cyclical defense industry. Right now, obviously, it is near or at the peak of the cycle with the Bush Administration in charge. Defense spending is at a decade high. The industry also is sensitive to the shift in government policies. The ability of AH to produce profit is dependent upon its lobbying skill.

Can investors sell Armor Holding stock at a higher price? They might. We had not done any research on AH since June. But the odd is , AH will have a hard time growing earning beyond 2007. Unless, of course, this administration decides to escalate spending some more. We would take profits if we bought AH at a lower price.


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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Armor Holdings Inc. (AH) or any other securities.

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