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Astronics' (ATRO) to Post Q1 Earnings: What's in the Cards?

Zacks Equity Research

Astronics Corporation ATRO is set to report first-quarter 2019 financial results on May 8, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 5.71%.

Let's take a closer look at the factors influencing Astronics’ quarterly results.

Factors to Consider

With solid global air traffic growth bolstering the commercial aerospace and enhanced spending by the U.S. Department of Defense strengthening the defense market, airframe manufacturers are steadily increasing their production rate. This, in turn, is favoring the Astronics’ Aerospace segment as major airframe manufactures are valued customers of this unit.

Considering this development, we expect this segment, which contributes around 85% of its total sales, to drive top-line growth for Astronics in the first quarter. In line with this, the Zacks Consensus Estimate for this segment’s sales, pegged at $176 million, reflects an improvement of 6.7% from the year-ago quarter’s reported figure.

Astronics Corporation Price and EPS Surprise

Astronics Corporation Price and EPS Surprise | Astronics Corporation Quote

In terms of innovation, the company launched the new CorePower Frequency Converter Unit (FCU) during the first quarter. This unit converts variable frequency power sources to constant 400Hz power for protecting sensitive aircraft electronics from unregulated frequency and power surges. Astronics also unveiled its new NuanciaRGBW Strip Lights to provide flexible illumination options for aircraft seats and cabins. Such innovations are expected to usher in order growth for the company and in turn boost its quarterly results.

Considering such developments, the Zacks Consensus Estimate for the company’s first-quarter sales, pegged at $190.8 million, suggest a 6.5% rise from the prior-year quarter’s reported number.

As the company continues to make progress with respect to margins in its Aerospace business and expects to witness significant business volumes in the current year, its bottom line can be projected to have benefited immensely in the quarter to be reported.

In February 2019, Astronics completed a divestiture of its semiconductor test business, within the Test Systems segment, for a total cash of $100 million. Per management’s projections, the company will record a pre-tax gain on the sale of approximately $80 million in the first quarter. We may expect the bottom line to benefit from these sales proceeds duly in the soon-to-be-reported quarter.

For first-quarter earnings, the Zacks Consensus Estimate is pegged at 37 cents, indicating a 236.4% improvement from the year-ago quarter’s reported figure.

Earnings Whispers

Our proven model does not conclusively show that Astronics is likely to beat on earnings in first-quarter 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here, as you see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Astronics has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Astronics currently carries a Zacks Rank #4 (Sell).

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Recent Defense Releases

Textron Inc. TXT reported first-quarter 2019 earnings from continuing operations of 76 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 8.6%.

Lockheed Martin Corp. LMT delivered first-quarter 2019 earnings of $5.99 per share, which surpassed the Zacks Consensus Estimate of $4.29 by 39.6%.

Spirit AeroSystems Holdings, Inc. SPR reported first-quarter 2019 adjusted earnings of $1.68 per share, which surpassed the Zacks Consensus Estimate of $1.67.

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