How Has Aerojet Rocketdyne Holdings Inc’s (NYSE:AJRD) Performed Against The Industry?
Examining Aerojet Rocketdyne Holdings Inc’s (NYSE:AJRD) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AJRD’s latest performance announced on 30 June 2018 and weigh these figures against its longer term trend and industry movements.
Check out our latest analysis for Aerojet Rocketdyne Holdings
How Well Did AJRD Perform?
AJRD’s trailing twelve-month earnings (from 30 June 2018) of US$9.10m has more than halved from US$17.60m in the prior year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -1.82%, indicating the rate at which AJRD is growing has slowed down. Why could this be happening? Well, let’s look at what’s occurring with margins and whether the whole industry is facing the same headwind.
Revenue growth in the last few years, has been positive, yet earnings growth has been declining. This means Aerojet Rocketdyne Holdings has been growing expenses, which is harming margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US aerospace & defense industry has been growing, albeit, at a unexciting single-digit rate of 7.38% over the prior year, and 3.85% over the past five. This growth is a median of profitable companies of 24 Aerospace & Defense companies in US including Butler National, Leonardo and Leonardo. This suggests that whatever tailwind the industry is profiting from, Aerojet Rocketdyne Holdings has not been able to leverage it as much as its industry peers.
In terms of returns from investment, Aerojet Rocketdyne Holdings has fallen short of achieving a 20% return on equity (ROE), recording 4.27% instead. Furthermore, its return on assets (ROA) of 1.47% is below the US Aerospace & Defense industry of 5.91%, indicating Aerojet Rocketdyne Holdings’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Aerojet Rocketdyne Holdings’s debt level, has increased over the past 3 years from 4.25% to 6.35%.
What does this mean?
Though Aerojet Rocketdyne Holdings’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that face a prolonged period of decline in earnings are going through some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. You should continue to research Aerojet Rocketdyne Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AJRD’s future growth? Take a look at our free research report of analyst consensus for AJRD’s outlook.
Financial Health: Are AJRD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
