Zacks Industry Rank Analysis Highlights: Boeing, Lockheed Martin, Northrop Grumman, Precision Castparts and Rockwell Collins.

CHICAGO -- Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis include Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC), Precision Castparts (NYSE: PCP) and Rockwell Collins (NYSE: COL). To see the Zacks Industry Rank and the trend in earnings estimates revisions for all 208 industry groups, visit http://at.zacks.com/?id=3154.

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

Boeing's (NYSE: BA) report yesterday morning highlighted the positive business momentum occurring in the Aerospace sector. BA generated adjusted fourth-quarter earnings of $1.16, easily surpassing expectations for profits of 97 cents. Strength in both the company's defense and commercial aircraft units drove revenues up 26% to $17.54 billion. The company raised its 2007 earnings guidance by 10 cents to a range of $4.55 to $4.75 per share, though the consensus estimate, as of this morning, was at $4.77.

Regular readers will know that Aerospace has continuously either had the best or one of the best Zacks Sector Ranks for several months. Higher government spending is playing a material role and the Democratic-led congress is unlikely to cut the defense budget ahead of the 2008 elections. (It should be noted, however, that there has recently been some calls to tighten the purse strings in regards to the war in Iraq.) Healthy demand for commercial aircraft and parts is also helping to drive earnings. A total of 11 aerospace companies within the Zacks Rank universe (a) have reported fourth-quarter results, including BA. Nine have topped expectations, one has met and one has missed.

The two primary industry groups in the Aerospace sector are Aerospace/Defense and Aerospace/Defense Equipment. BA is classified in Aerospace/Defense along with Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC). All are Zacks #2 Rank ("buy") stocks. Like BA, LMT and NOC topped expectations and raised their guidance.

Lockheed Martin generated fourth-quarter earnings of $1.64, 19 cents above expectations. Net sales rose 6% to $10.8 billion. Looking ahead, LMT raised its profit guidance for 2007 to between $5.80 to $6.00 per share, from a range of $5.60 to $5.80 per share. Ten of the 15 covering analysts raised their forecasts in response, causing the consensus estimate to rise by 14 cents to $6.02 per share.

Northrop Grumman earned $1.29 in the fourth quarter, besting expectations by three cents. Revenues rose 5% to $8 billion. NOC raised its profit guidance to between $4.80 and $5.05 per share, from a range of $4.65 to $4.90 per share. Ten of the 17 covering analysts adjusted their forecasts in response, causing the consensus estimate to rise by nine cents to $4.93 per share.

The Aerospace/Defense Equipment group contains four Zacks #1 Rank stocks ("strong buy"), including Precision Castparts (NYSE: PCP) and Rockwell Collins (NYSE: COL), and five Zacks #2 Rank stocks.

Precision Castparts recently topped fiscal third-quarter expectations by three cents with earnings of $1.29 per share. Revenues jumped by more than 60%, driven by aerospace demand for specialty metals. The combination of the strong performance, favorable industry conditions and upbeat comments by CEO Mark Donegan led brokerage analysts to raise their forecasts for both fiscal 2007 and fiscal 2008. The new fiscal 2007 consensus estimate calls for profits of $4.24, an increase of 24 cents from a week ago. The new fiscal 2008 forecast calls for profits of $5.21, an increase of 49 cents from a week ago.

Rockwell Collins generated fiscal first-quarter profits of 84 cents per share, 11 cents above expectations. Revenues rose 13%, aided by both higher government spending and a material increase in commercial aircraft equipment. COL expects growth in its commercial division to continue to be a primary driver of overall earnings and raised its full-year guidance as a result. The company now anticipates that fiscal 2007 profits will be in a range of $3.25 to $3.35, versus its previous guidance for profits of $3.10 to $3.20 per share. Ten of the 13 covering brokerage analysts raised their forecasts in response, causing the consensus estimate to rise 16 cents to $3.34 per share.

The interactive Zacks Industry Rank List allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. See the list at http://at.zacks.com/?id=3208.

(a)The Zacks Rank is assigned to companies with earnings estimates made available by brokerage analysts. The Zacks' database contains earnings estimates for approximately 4400 companies.

About Zacks Industry Rank and the Zacks Rank

Zacks Industry Rank is calculated by averaging the Zacks Rank for all covered companies within a given industry. The Zacks Rank is assigned to approximately 4400 stocks and ranges from #1 ("Strong Buy") to #5 ("Strong Sell"). Both the Zacks Industry Rank and the Zacks Rank are quantitative indicators designed to cover periods of 1-3 months.

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +31.8%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 143.6% annually (+4.8% vs. +11.8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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