Esterline Technologies (NYSE: ESL) is engaged in the design, manufacture, and marketing of engineered products and systems for applications in the aerospace and defense industries. The Avionics & Controls unit makes communications systems, medical equipment, and interface systems for aircraft and military vehicles. The Sensors & Systems operation manufactures temperature and pressure sensors, as well as fluid and motion control products. The Advanced Materials segment makes elastomer products, combustible ammunition components and electronic warfare countermeasures. Boeing (NYSE: BA) is a major customer. Eaton Corporation (NYSE: ETN) is a competitor.

The company surprised investors last week, when it reported Q3 EPS of 68 cents and revenues of $382.1 million. The Street had been expecting 64 cents and $374.6 million. Backlog at the end of the quarter was up 11.1% (yr/yr) to $1.06 billion. The CEO attributed success to robust aftermarket activity in both the commercial aerospace and defense markets. Management also guided FY08 EPS to $3.50-$3.60, versus consensus of $3.58.

Esterline Technologies (NYSE: ESL) is engaged in the design, manufacture, and marketing of engineered products and systems for application in the aerospace and defense industries. The Avionics & Controls unit makes communications systems, medical equipment, and interface systems for aircraft and military vehicles. The Sensors & Systems operation manufactures temperature and pressure sensors, as well as fluid and motion control products. The Advanced Materials segment makes elastomer products, combustible ammunition components and electronic warfare countermeasures. Boeing (NYSE: BA) is a major customer. Eaton Corporation (NYSE: ETN) is a competitor.

The company surprised investors late last month, when it reported Q1 EPS of $1.04 and revenues of $372.4 million. The Street had been expecting 59 cents and $342.3 million. The CEO noted that quarterly organic growth of nearly 25% was well balanced between the military and commercial businesses. Management also guided FY08 EPS to $3.35-$3.50, versus consensus of $3.17.

MOST NOTEWORTHY: Micron, Chico's FAS and Lifetime Brands were today's noteworthy initiations:

• Oppenheimer assumed Micron (NYSE: MU) with an Outperform rating and $9.50 target, as they believe price declines in the DRAM market moderated in 2H of the December quarter and that concerns of oversupply are already priced into shares.
  
• Stanford believes shares of Chico's FAS (NYSE: CHS) will remain under pressure over the next three to six months given the adverse economic conditions and the company's "less-than-exciting" fashion assortment. The firm started shares with a Hold rating and $10 target.
  
• Lifetime Brands (NASDAQ: LCUT) was initiated with a Neutral rating at SunTrust. The firm prefers to wait for greater visibility on the U.S. consumer spending environment before becoming more constructive on the name.

OTHER INITIATIONS:

• Soleil initiated Worthington (NYSE: WOR) with a Hold rating.
  
• Jefferies started Esterline Technologies (NYSE: ESL) with a Buy rating and $58 target.
  
• Oppenheimer assumed Spansion (NASDAQ: SPSN) with a Perform rating.

Many corporate contributors to the domestic aerospace/defense effort tend to specialize in a few systems. There is an outfit in Bellevue, Washington that takes a big swing, though, providing everything from communications systems and motion control devices to electronic warfare countermeasure products.

Esterline Technologies (NYSE: ESL) is engaged in the design, manufacture, and marketing of a wide variety of engineered products and systems. The Avionics & Controls segment makes communications systems, medical equipment, and interface systems for aircraft and military vehicles. The Sensors & Systems operation manufactures temperature and pressure sensors, as well as fluid and motion control products. The Advanced Materials division makes elastomer products, combustible ammunition components, radar absorbing seals and stealth layering products. Boeing (NYSE: BA) is a major customer. Eaton Corporation (NYSE: ETN) is a competitor.

The company surprised investors last week, when it reported fiscal Q2 EPS of $0.76 and revenues of $312.3 million. The Street had been expecting $0.63 and $295.5 million. Management also guided FY07 EPS to $2.50-$2.60, versus consensus of $2.55. ESL shares popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend ESL with three "strong buys," two "buys" and four "holds." Analysts expect an 18% growth rate, through the next year. The stock's P/E ratio (20.24), PEG ratio (1.27), Price to Sales ratio (1.17), Price to Book ratio (1.63), Price to Cash Flow ratio (11.40) and Sales Growth rate (25.98%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 95%of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $30.97 and $48.29. A stop-loss of $40.10 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.