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Optionetics Commentary

TECH WORLD: DynCorp International Keeps Expanding Operating Margins


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Jeff Neal, Optionetics.com
July 31, 2007


DynCorp International Incorporation (DCP), through its subsidiaries, provides defense and technical services and government outsourced solutions primarily to United States government agencies. The company’s customers include the United States Department of Defense, the United States Department of State, allied foreign governments, commercial customers and certain other United States federal, state and local government The company conducts its operations through two business segments: Government Services and Maintenance and Technical Support Services.

DynCorp International is a multifaceted, global enterprise that provides innovative solutions to the diverse technology and professional services needs of government and commercial industry worldwide. They also have important commercial business in aviation, infrastructure development, security, and logistics, including international projects to build and manage regional air facilities.

In recent years, DynCorp International has broadened its reach in program management and security. To date, we have recruited, trained, and deployed more than 5,000 highly-qualified civilian peacekeepers and police trainers to 11 countries, including Haiti, Bosnia, Afghanistan, and Iraq, for the Department of State. They also provide major support to protect American diplomats and diplomatic facilities as well as key allied leaders in high-threat countries.

Earnings are probably the most closely followed aspect of a firm''s income statement as an indicator of profitability. Also referred to as the net income for a specified period of time, earnings are equal to a company''s after-tax income on the income statement. The net income is calculated by taking revenues and adjusting for depreciation, interest, taxes and expenses incurred through business operations.

DynCorp International has expanding operating margins as well as tremendous earnings growth and momentum over the past four quarters. The company’s most recent earnings came in at $552 million in revenues and 19 million in net income, representing a significant increase over the same quarter in the previous year.

The stock looks good technically as well, with a profit target of $26 per share. The company has enough open interest to make them tradable. The company does not offer LEAPS, but the current cycle extends out to March of 2008.

Figure 1: Daily Elliot Wave-4 Buy Pattern for DynCorp International

Happy Trading.


Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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