Today’s update from Meggitt (LSE: MGGT) shows that the aerospace and defence company is on track to meet full-year guidance. Encouragingly, the performance of the majority of the company’s divisions was positive, with civil aerospace revenue rising by 6% and military revenue increasing by 1%. However, weakness within Meggitt’s energy division persisted and its sales slumped by 15% during the period.

Meggitt has continued to make impressive progress with its cost reductions, with it being confident in achieving the targeted headcount reduction of 400 by the end of the first half of the year. And with Meggitt set to benefit from a stronger US dollar, its near-term outlook appears to be positive, which is a key reason why its shares have risen by 5% today.

Although Meggitt is in the midst of a challenging period, it seems to be performing relatively well. It trades on a price-to-earnings (P/E) ratio of just 12.5 and while there’s still some way to go before it returns to full health, the chances of a major correction appear to be relatively low. In other words, the potential rewards from investing in Meggitt seem to outweigh its risks for long-term investors.

Big change

Of course, Meggitt isn’t the only company enduring a period of significant change. BT (LSE: BT-A) is implementing an ambitious plan to integrate the recently acquired EE mobile network into its business while also investing heavily in its network and in a pay-TV offering. While all of this change is increasing the size of BT’s customer base and could lead to major cross-selling opportunities within the quad-play space, BT is at risk of disappointing the market if the pace of change is slower than anticipated.

Furthermore, BT isn’t the only company rapidly diversifying its offering, with the quad play space becoming increasingly competitive. This could hurt margins as price becomes a greater differentiator and with BT trading on a relatively high P/E ratio of 14.8, its rating could come under a degree of pressure. While this doesn’t mean that BT’s share price will fall heavily, it could fail to outperform the FTSE 100.

Transformation strategy

Meanwhile, Glencore (LSE: GLEN) continues to make progress with its transformation strategy that will see it reduce debts and improve its long-term financial outlook. This has been aided by the sale of the company’s agriculture unit stake for $2.5bn and the proceeds from this will go towards reducing the company’s net debt. And with Glencore forecast to increase its bottom line by 84% next year, its shares could soar – especially since it trades on a price-to-earnings-growth (PEG) ratio of 0.3.

However, with Glencore being heavily dependent on commodity prices for its profitability, a major correction can’t be ruled out if commodity prices slump. As such, Glencore remains a relatively high-risk play, although with generous potential rewards it may be of interest to less risk-averse investors.

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Peter Stephens owns shares of Meggitt. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.