It has been about a month since the last earnings report for Rockwell Collins, Inc. . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
Rockwell Collins Tops Q2 Earnings, Revises FY17 View
Rockwell Collins reported financial results for second-quarter fiscal 2017 (ended Mar 31, 2017). The company’s adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate of $1.31 by 2.3%. Reported earnings also grew 3.1% from $1.30 per share earned a year ago.
Revenues
In the fiscal second quarter Rockwell Collins’ total sales were $1,342 million, which beat the Zacks Consensus Estimate of $1,330 million by 0.9%. Revenues also grew 2.4% year over year on higher sales at Government Systems and Information Management Services.
Operational Highlights
Total segment operating income during the quarter was $282 million, up 3.7% from $272 million in the year-ago quarter.
Operating margin during the quarter expanded 30 basis points (bps) year over year to 21%.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $255 million, up 5.4%. The figure represented 19% of total quarterly sales compared with 18.5% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $594 million were down 2.8% year over year, primarily due lower business aircraft OEM production rates.
Operating earnings for the quarter were $132 million compared with $135 in the year-ago quarter. Operating margin expanded 10 bps to 22.2%.
Government Systems: The segment reported sales of $565 million, up 5% on the back of higher simulation and training program revenues, and higher fixed-wing platform revenues.
Operating earnings for the quarter were $114 million, up 5.6% from $108 million in the year-ago period. Operating margin expanded 10 bps to 20.2% primarily driven by higher sales volume and cost-saving initiatives.
Information Management Services: Segment sales were $183 million, up from $162 million in the year-ago period on the back of double-digit growth in aviation-related sales.
Operating earnings for the quarter were $36 million, up from $29 million in the year-ago period. Operating margin was 19.7% compared with 17.9% a year ago. The increase was primarily due to higher sales volume.
Financial Condition
As of Mar 31, 2017, Rockwell Collins’ cash and cash equivalents were $281 million compared with $340 million as of Sep 30, 2016.
Long-term debt (net) was $1,354 million as of Mar 31, 2017, down from $1,374 million as of Sep 30, 2016.
Cash used for operating activities in the first six months of fiscal 2017 was $1 million, compared with $45 million a year ago.
Fiscal 2017 Guidance
Adjusted earnings per share are expected in the range of $5.95–$6.15.
The company has increased its fiscal 2017 revenue guidance in the range of $6.7–$6.8 billion compared to the prior guidance of $5.3–$5.4 billion.
Total segment operating margin is now expected to be in the band of 19%–20% compared with the previous guidance of 21%.
The company expects free cash flow in the range of $650−$750 million compared with previous guided range of $600−$700 million. Its R&D expenditure guidance is projected in the $1.05−$1.15 billion band, up from the prior $900−$950 million band.
The full-year tax rate is anticipated to be in the range of 27%–28% compared with 28%–29% guided earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter, while looking back an additional 30 days, we can see even more upward momentum. There have been five moves up in the last two months. In the past month, the consensus estimate has shifted by 17.9% due to these changes.
Rockwell Collins, Inc. Price and Consensus
VGM Scores
At this time, the stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'C'. Following the exact same course, the stock was allocated also 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of this revision looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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Rockwell Collins (COL) Up 3.1% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Rockwell Collins, Inc. . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
Rockwell Collins Tops Q2 Earnings, Revises FY17 View
Rockwell Collins reported financial results for second-quarter fiscal 2017 (ended Mar 31, 2017). The company’s adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate of $1.31 by 2.3%. Reported earnings also grew 3.1% from $1.30 per share earned a year ago.
Revenues
In the fiscal second quarter Rockwell Collins’ total sales were $1,342 million, which beat the Zacks Consensus Estimate of $1,330 million by 0.9%. Revenues also grew 2.4% year over year on higher sales at Government Systems and Information Management Services.
Operational Highlights
Total segment operating income during the quarter was $282 million, up 3.7% from $272 million in the year-ago quarter.
Operating margin during the quarter expanded 30 basis points (bps) year over year to 21%.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $255 million, up 5.4%. The figure represented 19% of total quarterly sales compared with 18.5% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $594 million were down 2.8% year over year, primarily due lower business aircraft OEM production rates.
Operating earnings for the quarter were $132 million compared with $135 in the year-ago quarter. Operating margin expanded 10 bps to 22.2%.
Government Systems: The segment reported sales of $565 million, up 5% on the back of higher simulation and training program revenues, and higher fixed-wing platform revenues.
Operating earnings for the quarter were $114 million, up 5.6% from $108 million in the year-ago period. Operating margin expanded 10 bps to 20.2% primarily driven by higher sales volume and cost-saving initiatives.
Information Management Services: Segment sales were $183 million, up from $162 million in the year-ago period on the back of double-digit growth in aviation-related sales.
Operating earnings for the quarter were $36 million, up from $29 million in the year-ago period. Operating margin was 19.7% compared with 17.9% a year ago. The increase was primarily due to higher sales volume.
Financial Condition
As of Mar 31, 2017, Rockwell Collins’ cash and cash equivalents were $281 million compared with $340 million as of Sep 30, 2016.
Long-term debt (net) was $1,354 million as of Mar 31, 2017, down from $1,374 million as of Sep 30, 2016.
Cash used for operating activities in the first six months of fiscal 2017 was $1 million, compared with $45 million a year ago.
Fiscal 2017 Guidance
Adjusted earnings per share are expected in the range of $5.95–$6.15.
The company has increased its fiscal 2017 revenue guidance in the range of $6.7–$6.8 billion compared to the prior guidance of $5.3–$5.4 billion.
Total segment operating margin is now expected to be in the band of 19%–20% compared with the previous guidance of 21%.
The company expects free cash flow in the range of $650−$750 million compared with previous guided range of $600−$700 million. Its R&D expenditure guidance is projected in the $1.05−$1.15 billion band, up from the prior $900−$950 million band.
The full-year tax rate is anticipated to be in the range of 27%–28% compared with 28%–29% guided earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter, while looking back an additional 30 days, we can see even more upward momentum. There have been five moves up in the last two months. In the past month, the consensus estimate has shifted by 17.9% due to these changes.
Rockwell Collins, Inc. Price and Consensus
Rockwell Collins, Inc. Price and Consensus | Rockwell Collins, Inc. Quote
VGM Scores
At this time, the stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'C'. Following the exact same course, the stock was allocated also 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of this revision looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.