March 27, 2008 - DRS Technologies, Inc. (DRS-NYSE): Methods used to track military activity are complex, but DRS Technologies makes the tasks manageable with electronic systems that process, display, and store complex military and aerospace data. Its primary offerings include surveillance and radar systems, ruggedized computers, weapons targeting systems, flight recorders, communications systems, thermal imaging systems, air combat training systems, and video recorders for defense and aerospace applications. DRS, which acquired and integrated Integrated Defense Technologies -- and bought Engineered Support Systems -- relies on US government agencies (primarily the DoD) for 90% of sales.

Fiscal 2007 looks like it will be a record year for sales and earnings (fiscal year ends March 31). That puts revenues at $3.2 billion and earnings per share at $3.30. In 2006, sales came to $2.82 billion and eps was $3.12. For 2008, analysts predict revenues of $3.475 billion and earnings of $4.00 a share. In 2009, look for $3.75 billion and $4.50.

First and second quarter of last year had some aberrations in them as far as earnings went. In the first quarter, some inventory was scrapped and new material bought because of design changes, costing the bottom line 56 cents a share. In the second quarter, interim tax benefits and pension plans, both extraordinary items, helped eps by 25 cents a share. A more normal quarter from the operational profits perspective was the 3rd and soon to be announced 4th. In the third quarter, the company saw improved sales in computer systems, driver vision-enhancing kits, ground and airborne vehicle sighting and targeting systems, and power generators.

In the third quarter, the company booked $857.9 million of orders for products and services, broken down into $68 million for power products, $150 million for ground-based and $129 million for airborne thermal imaging systems and $117 million for communications products, and services. The funded backlog stood at a record $3.6 billion at the end of December.

Other numbers: Current assets are about 1.5 times current liabilities. Net profit margin is 4.2%. Return on Equity is 8.5%. There's a dividend of 12 cents a share for a yield of .2%. Debt is 51% of capital. Over the next 5 years, analysts predict sales growth of 9.5% with earnings increasing by 14% on average per year. The stock hit an all-time high of $61.33 in December of last year. The P/E (price to earnings) ratio is 17.

This stock deserves most investors' attention if they're looking for a solid company with decent growth. It's not stellar growth, but it's steady. While there is the caveat of selling mostly to one buyer, that buyer is huge and will buy in war and peace, but not as much in peace.

- Company Web site: www.drs.com

- Ted Allrich