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Where Orbital ATK Inc (NYSE:OA) Stands In Terms Of Earnings Growth Against Its Industry

Frank Brewer

Examining Orbital ATK Inc’s (NYSE:OA) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess OA’s latest performance announced on 01 April 2018 and weight these figures against its longer term trend and industry movements. Check out our latest analysis for Orbital ATK

How Well Did OA Perform?

OA’s trailing twelve-month earnings (from 01 April 2018) of US$345.00m has jumped 22.29% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 1.71%, indicating the rate at which OA is growing has accelerated. What’s enabled this growth? Let’s see if it is solely attributable to an industry uplift, or if Orbital ATK has seen some company-specific growth.

Over the last couple of years, Orbital ATK increased its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the US aerospace & defense industry has been growing, albeit, at a subdued single-digit rate of 5.59% over the prior year, and 4.21% over the last five years. This means any tailwind the industry is deriving benefit from, Orbital ATK is capable of amplifying this to its advantage.

NYSE:OA Income Statement June 25th 18
NYSE:OA Income Statement June 25th 18

In terms of returns from investment, Orbital ATK has not invested its equity funds well, leading to a 18.30% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 7.65% exceeds the US Aerospace & Defense industry of 6.35%, indicating Orbital ATK has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Orbital ATK’s debt level, has increased over the past 3 years from 4.99% to 12.00%.

What does this mean?

Though Orbital ATK’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Orbital ATK to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for OA’s future growth? Take a look at our free research report of analyst consensus for OA’s outlook.

  2. Financial Health: Is OA’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.

  3. 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 01 April 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.