It has been about a month since the last earnings report for Aerojet Rocketdyne Holdings . Shares have added about 6.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aerojet Rocketdyne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Aerojet Rocketdyne Q3 Earnings Top Estimates, Fall Y/Y

Aerojet reported third-quarter earnings per share (EPS) of 45 cents, which surpassed the Zacks Consensus Estimate of 44 cents by 2.3%. The bottom line, however, declined 22.4% year over year from 58 cents reported in the year-ago quarter.

Operational Performance

The company’s quarterly sales of $549.8 million inched up 0.8% from the year-ago quarter’s $545.3 million. The top line missed the Zacks Consensus Estimate by 1.6%. The year-over-year increase in net sales was on account of an improvement in Aerospace and Defense segment sales.

Aerojet Rocketdyne’s backlog at the end of third-quarter 2022 totaled $6.7 billion, lower than $6.9 billion witnessed at the end of the second quarter of 2022. Of this, funded backlog amounted to $3 billion.

Total operating costs and expenses increased 4.8% to $496.5 million in the third quarter. Operating income of $53.3 million declined 25.4% from the prior-year period’s $71.4 million.

Segmental Performance

Aerospace & Defense: Revenues at this segment rose 0.8% year over year to $549.2 million from the previous year’s $544.7 million.

Real Estate: The segment generated revenues of $0.6 million, in line with the year-ago quarter’s reported revenues.

Financial Update

Aerojet Rocketdyne exited the third quarter with cash and cash equivalents of $334.5 million, down from $700.4 million as of Dec 31, 2021.

Long-term debt amounted to $292.1 million, down from $294.6 million as of Dec 31, 2021.

Operating cash outflow from continuing operations was $73.8 million as of Sep 30, 2022 against a cash inflow of $95.4 million in the year-ago period.

Free cash outflow at the end of the reported quarter was $98 million against the prior year’s free cash inflow of $78.1 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Aerojet Rocketdyne has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Aerojet Rocketdyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Aerojet Rocketdyne is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Raytheon Technologies (RTX Quick QuoteRTX - Free Report) , a stock from the same industry, has gained 4.9%. The company reported its results for the quarter ended September 2022 more than a month ago.

Raytheon Technologies reported revenues of $16.95 billion in the last reported quarter, representing a year-over-year change of +4.6%. EPS of $1.21 for the same period compares with $1.26 a year ago.

Raytheon Technologies is expected to post earnings of $1.24 per share for the current quarter, representing a year-over-year change of +14.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Raytheon Technologies. Also, the stock has a VGM Score of D.