John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Breeze-Eastern Is Undervalued Given Dominant Market Share, No Debt, And High Free Cash Flow

Breeze-Eastern (NYSEMKT:BZC) is attractive on a technical and fundamental basis given the pullback to support, dominant market share, no debt, and high free cash flow. Recent worries over defense budget cuts as a result of sequestration provide long-term investors a low risk/high reward entry point.

Company overview

BZC designs, manufactures and services high performance lifting and pulling devices for military and civilian aircraft, including rescue hoists, winches, cargo hooks and weapons-lifting systems. BZC equipment is efficient and reliable in extreme operating conditions and used to complete rescue operations, military insertion/extraction operations, cargo transport and weapons loading onto aircraft and ground-based launching systems.

Source: SEC filings

Investment thesis

BZC should trade at a higher EV/EBITDA multiple given the following:...

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