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What's in Store for Aerojet Rocketdyne's (AJRD) Q2 Earnings?

Zacks Equity Research

Aerojet Rocketdyne Holdings, Inc. AJRD is yet to release second-quarter 2019 results. The company is known for supplying the world’s most technologically-advanced propulsion systems for both commercial and defense aircraft.

In the last reported quarter, the company delivered a positive earnings surprise of 41.94%. Moreover, Aerojet Rocketdyne surpassed the Zacks Consensus Estimate in three of the past trailing four quarters, the average being 36.67%.

Let’s see how things are shaping up prior to this announcement.

Factors Under Consideration

Aerojet Rocketdyne adopted a new revenue recognition guidance last year, using the modified retrospective method. The primary impact of the new guidance was a change in the timing of revenue recognition on certain long-term contracts in the company’s Aerospace and Defense segment. Consequently, this has negatively impacted he company’s revenues in the past couple of quarters and the trend is likely to continue.

However, improved performance generated by a handful of programs like Terminal High Altitude Area Defense (THAAD), AJ-60 and RL-10 programs are driving the company’s top line. In line with this, the Zacks Consensus Estimate for second-quarter revenues stands at $474.2 million, indicating a rise of 1.5% from the year-ago quarter’s reported figure.

However, Aerojet Rocketdyne has been incurring higher interest expenses and operating costs over the past few quarters. We expect similar trends to continue in the soon-to-be-reported quarter, which in turn might hurt the company’s bottom line. In line with this, the Zacks Consensus Estimate for Aerojet Rocketdyne’s second-quarter earnings is pegged at 39 cents, implying a decline of 13.3% from the prior-year quarter’s reported figure.

Earnings Whispers

Our proven model does not conclusively show that Aerojet Rocketdyne is likely to beat on earnings this quarter. 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 will see below.

Earnings ESP: The company has an Earnings ESP of -2.56%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Aerojet Rocketdyne 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.

Aerojet Rocketdyne Holdings, Inc. Price and EPS Surprise

 

Aerojet Rocketdyne Holdings, Inc. Price and EPS Surprise

Aerojet Rocketdyne Holdings, Inc. price-eps-surprise | Aerojet Rocketdyne Holdings, Inc. Quote

Stocks to Consider

Here are some defense companies you may want to consider, as our model shows that these have the right combination of elements to post an
earnings beat this quarter:

Triumph Group, Inc. TGI is scheduled to report second-quarter 2019 results on Jul 31. The company has an Earnings ESP of +6.03% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ducommun Incorporated DCO is scheduled to report second-quarter 2019 results on Aug 5. The company has an Earnings ESP of +12.05% and a Zacks Rank #3.

Moog Inc. MOG.A is scheduled to report second-quarter 2019 results on Jul 26. The company has an Earnings ESP of +0.76% and a Zacks Rank #3.

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Aerojet Rocketdyne Holdings, Inc. (AJRD) : Free Stock Analysis Report
 
Triumph Group, Inc. (TGI) : Free Stock Analysis Report
 
Ducommun Incorporated (DCO) : Free Stock Analysis Report
 
Moog Inc. (MOG.A) : Free Stock Analysis Report
 
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