GR: Good Long term Buy

Goodrich is an extremely well run Company that is remaining highly profitable in one of the worst economic environments in recent memory. Although the market is currently retesting its November lows, GR is still well above where it was then. Consider the following: ? Earnings growth is above 33% for the last ten years. (A little deceptive because this takes into account non-reoccurring gains from things like the sale of businesses, one-time charges, etc.) ? No losses in the past 10 years, a profit of over $100 million last quarter ? Long term debt relatively low compared to the assets it holds ? Net Cash is up to almost half a billion ? Great management. CEO willing to make tough decisions to keep the company profitable. ? For the full year of 2008, Goodrich earned $681.2 million, or $5.39 per diluted share, on sales of $7.06 billion. Net income grew 24.6 percent over the $482.6 million, or $3.78 per diluted share, Goodrich earned in 2007. The company had revenue of $6.39 billion in 2007. ? The earnings per share for both the quarter and the year easily beat the average projections made by analysts who cover the company. The average forecast for the quarter had been $1.05 per diluted share for the quarter and $5.01 per diluted share for the year. ? Despite the strong ending to the year, the CEO warned of economic uncertainty in 2009. The company says it expects to make $4.50 to $4.90 per diluted share this year. That's down from the $5.05 to $5.25 per diluted share the company had previously projected for 2009. Still very respectable numbers considering how bad I expect 2009 to be. My strategy will be to buy a bit now and average down at the low 30s and average down again if it goes below its November low of approximately $25. Finally, here is my analysis, taken from chapter 11 of the intelligent investor by Benjamin Graham. I have used the most conservative current earnings estimates and slashed the CAGR growth rate in half from what is shown on the S&P report for Goodrich. Thus I have tried to be as conservative as possible in my estimates, calculations, and target price. $4.50 (earnings per share estimate for 2000) x (8.5 + 2 x 4.9 (long term growth rate)) = $82.32 $82.32(target price)-38.90/38.90 = Margin of Safety of 111.6% Conclusion: Fair value is around $82.32 with a Margin of Safety of 111.6%