Are BAE Systems plc, Standard Life plc & Spirent Communications plc a buy after today’s updates?

BAE Systems (LSE: BA) unveiled a £3.8bn list of recent and anticipated contract wins this morning. The group will tell investors at its AGM that underlying earnings are expected to be 5%-10% higher than last year.

The earnings guidance is in line with current market forecasts and suggests underlying earnings of about 39p per share are likely this year. This puts BAE Systems on a modest forecast P/E of 12.3, with a forecast yield of 4.5%.

In my view this could be a smart time to buy. Defence spending in the US, UK and Middle East appears to be stable and recovering from the cutbacks of recent years. BAE’s sales are expected to rise by 8% this year.

The firm’s forecast earnings of 39p per share provide a decent level of cover for the expected dividend of 21.4p per share. I’m confident that the 2016 payout should be safe and believe these shares are an excellent bet for long-term income.

I believe that BAE’s scale and its diversity — the firm’s activities range from shipbuilding to cyber security — are likely to result in a profitable long-term future.

Big scale may cut costs

Scale and diversity are also attractions at Standard Life (LSE: SL), which announced the acquisition of Axa’s UK advisory business this morning. You may know the firm concerned as Elevate — it provides financial advice for around 160,000 UK savings and investment customers.

The Elevate deal will add £9.8bn of assets under administration and increase Standard Life’s UK advisory customer base by 84% to 350,000. The deal will deliver “significant benefits”, according to the firm.

Standard Life isn’t just dependent on its UK business, however. Last year, two thirds of the group’s net inflows of new funds came from overseas. Strong growth was reported in Europe, India and China.

The group’s shares have fallen by 32% over the last year. In my view the stock now looks quite cheap, on a forecast P/E of 12 and with a prospective dividend yield of 6.3%. This translates into a forecast dividend payout of 20.1p per share, which should be adequately covered by forecast earnings of 26.7p per share. Now could be a good time to buy more, for dividend investors.

Testing times for tech firm

FTSE small cap firm Spirent Communications (LSE: SPT) rose by 4% this morning, after the group said that sales rose by 6.3% during the first quarter. Adjusted operating profit rose to $1.8m, a considerable improvement on last year’s $3.6m operating loss.

Spirent makes testing systems for mobile phone networks. After a difficult few years, caused by changing customer requirements and low spending, profits are expected to bounce back this year.

Broker forecasts suggest that Spirent’s adjusted earnings will rise by 63% to 5.8 cents per share. The firm’s shares currently trade on a 2016 forecast P/E of 21. This doesn’t look cheap, but Spirent also offers an attractive 3.4% forecast yield which should be covered by free cash flow.

You may also be interested to note that nearly 15% of Spirent’s market value is covered by its $102m net cash balance. This is a well-financed firm with a good history of cash generation and dividends.

Spirent may well be worth a closer look following today’s news.

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Roland Head owns shares of BAE Systems. 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.