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What's in Store for Aerojet Rocketdyne's (AJRD) Q4 Earnings?

Zacks Equity Research

Aerojet Rocketdyne Holdings, Inc. AJRD is yet to release its fourth-quarter and full-year 2018 results. Notably, it is a supplier of 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 40%. Moreover, Aerojet Rocketdyne surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 19.27%.

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

Factors Under Consideration

Last year, Aerojet Rocketdyne adopted a new revenue recognition guidance using the modified retrospective method, which came into effect from Jan 1, 2018. 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. This, in turn, has been significantly hurting the company’s top line for the past couple of quarters and can be expected to have an adverse effect on its fourth-quarter sales as well.  

In line with this, the Zacks Consensus Estimate for fourth-quarter revenues stands at $500 million, reflecting a year-over-year decline of 5.4%. However, such revenue numbers may not get translated into lower bottom-line figures, courtesy of an anticipated operational improvement. Meanwhile, risk retirements on the RS-68 and RL-10 programs have been providing a boost to the segment margins lately. Also, lower tax rates owing to the latest U.S. tax reforms should drive the company’s bottom-line performance.

Considering the aforementioned factors, the Zacks Consensus Estimate for Aerojet Rocketdyne's fourth-quarter earnings is pegged at 36 cents, mirroring an annual surge of 125%.

Aerojet Rocketdyne Holdings, Inc. Price and EPS Surprise

Aerojet Rocketdyne Holdings, Inc. Price and EPS Surprise | Aerojet Rocketdyne Holdings, Inc. Quote

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 0.00%. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Release

Huntington Ingalls Industries’ HII fourth-quarter 2018 earnings of $4.94 per share surpassed the Zacks Consensus Estimate of $4.45 by 11%.

Spirit AeroSystems Holdings SPR reported fourth-quarter 2018 adjusted earnings of $1.85 per share, which exceeded the Zacks Consensus Estimate of $1.78 by 4%.

Raytheon Company RTN reported fourth-quarter 2018 earnings per share (EPS) of $2.93 from continuing operations, which outpaced the Zacks Consensus Estimate of $2.89 by 1.4%.

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Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Aerojet Rocketdyne Holdings, Inc. (AJRD) : Free Stock Analysis Report
 
Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report
 
Raytheon Company (RTN) : Free Stock Analysis Report
 
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Zacks Investment Research