STE’s Narrow Moat Rating Reflects Strong Intangible Assets and Switching Costs

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, defense, 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 21% on revenue CAGR of 11% as commercial aerospace continues to benefit from increased capacity and strong engine service demand and as global defense spending rises.