(Summary) (Company) (Chart)
31 July 2016
1yr Target $36.67
Payout Ratio 35.29%
1yr Cap Gain 12.55%
1yr Tot Return 14.02%
EPS (ttm) $1.36
EPS next yr $1.82
Forward P/E 17.93
EPS next 5yr 18.45%
1yr Price Support $33.57
Market Cap $4.53 Bil
Revenues $1.60 Bil
Earnings $189.80 Mil
Profit Margin 11.81%
Quick Ratio 2.40
Current Ratio 3.20
1yr RevGR 1.76%
3yr RevGR 3.44%
5yr RevGR 2.32%
1yr EarnGR 23.74%
3yr EarnGR 5.79%
5yr EarnGR 2.23%
1yr DivGR 9.75%
3yr DivGR 14.31%
5yr DivGR 49.62%
Headquartered in Wilsonville, Oregon, the company has manufacturing and R&D facilities in Goleta (near Santa Barbara, California), North Billerica (a suburb of Boston, Massachusetts), Bozeman (Montana), Stillwater (Oklahoma), Freeport (Pennsylvania), West Lafayette (Indiana), Oak Ridge (Tennessee), Tallinn (Estonia), Täby (Sweden), Fareham (UK) and West Malling (UK). Worldwide, FLIR employs in excess of 2,700 people, with more than 1,600 located in the United States.
The company is structured to focus on six specific business segments.
- The Surveillance group addresses high-end military and other governmental thermal imaging markets.
- The Instruments segment produces thermography cameras for building inspection, predictive maintenance, and R&D, as well as test and measurement tools.
- The OEM & Emerging Markets group serves the OEM camera cores and components, new technologies, and new applications for existing technologies.
- Marine electronics including thermal cameras under both the FLIR and Raymarine brands fall under the Maritime segment.
- Thermal and visible light cameras for industrial, commercial, and residential security are serviced under the Lorex by FLIR brands by the Security segment.
- The Detection segment produces sensors for chemical, biological, radiation, and explosive detection.
The company began in 1978 with airborne IR systems, and developed from 1978 to 2004 through product development and acquisitions of related companies. Originally based in Tigard, Oregon, the company relocated to Portland in the mid-1990s. FLIR teamed up with Hughes Aircraft Company in 1990, with Hughes taking part ownership of FLIR.
The company became publicly traded in a June 1993 IPO which raised $11.5 million for the company with shares offered at $12.50. In 1994, the company had grown to sales of $47 million annually. The company next bought Sweden's Agema Infrared System in 1997 and this transaction doubled the size of the company. Acquisitions continued the following year as the company purchased Inframetrics Inc. of Massachusetts for $48 million. Sales at FLIR grew to $311 million in fiscal year 2003. In 2004, the company bought a building in Wilsonville from Mentor Graphics for $10.3 million for use as a new headquarters.
Beginning in 2005, the company began supplying BMW with imaging technology for use on the luxury automaker's vehicles. That July, FLIR announced a seven-year contract worth up to $250 million with the United States Army for cameras to be installed on helicopters.
In March 2007, the company reported that it would restate its financial statements for the period from 1995 to 2005, primarily to record non-cash charges for compensation expense relating to past stock option grants. FLIR was also sued by investors over these same allegations.
The company purchased Extech Instruments Corp. in October 2007 for $40 million. The next month FLIR executed its third stock split. FLIR made another acquisition in April 2008 when it purchased Ifara Tecnologias of Spain for about $11 million. For the 2008 fiscal year, the company recorded $1.1 billion in sales, a record for the company. It sold Extech Data Systems, a division of Extech which made portable printers, in December 2009, and bought the security hardware maker Directed Perception that month for $20 million.
FLIR continued to grow via acquisitions when it purchased bankrupt Raymarine in May 2010 for $180 million. On November 30, 2015 FLIR announced that it had acquired DVTEL, Inc, a leader in software and hardware technologies for advanced video surveillance, for approximately $92 million in cash.
FLIR has had pretty good growth over the last decade but unfortunately it occurred in the first half of that a decade. Organic growth was the initial driver during those early years but FLIR has recently spent over $750 Million to acquire a range of businesses. These acquisitions have experienced lower margins suppressing the overall margins of the business from around 30% in 2005 to a level nearer to 20% today. In addition, revenues have been pretty flat since 2011 coming in near $1.5 - $1.6 Billion.But it is important to realize that FLIR has achieved this growth while maintaining a healthy balance sheet while also buying back a tenth of its outstanding shares as well.
I also get the feeling that FLIR is finally starting to focus on its businesses and begin to once again grow it revenues, earnings and dividends. With a projected 5 year earnings growth rate in excess of 18%, the one year projected target is easily obtainable. From that point forward it seems reasonable that the fundamentals will increase at a rate similar to the earnings projections. And that's a nice return on investment.
I'm a conservative buyer of securities so I'd like to buy these shares as cheaply as possible for a number of reasons. Most of all, a cheaper price would increase my estimated one year return on investment and raise my annual yield. I also like to buy shares of companies at or below a P/E ratio of 20 (and even better at a PEG ratio of 1 or below). So my position will be to put in a buy order at or below $31 per share and see what happens. If it doesn't execute in the next week or so I may have to raise that buy order. But not by much.