ST Engineering's Earnings to Grow on Defense Opportunities, Cost Savings

ST Engineering is driving growth through improved utilization of its capital alongside a plan to contain costs. It has sold and continues to offload noncore activities to focus on areas that will provide synergies to its key commercial aerospace, defence and smart city activities. In this regard, it is adding proprietary product makers to its stable. Overall, we see STE’s EPS growing at a five-year compound annual growth rate of 19% on revenue CAGR of 10% as commercial aerospace continues to benefit from increased capacity and strong engine service demand and as global defense spending rises.