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Orbital ATK (OA) Q4 Earnings Miss Estimates, Gives '17 View

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Orbital ATK, Inc. 's ) fourth-quarter 2016 adjusted earnings of $1.26 per share missed the Zacks Consensus Estimate of $1.45 per share by 13.1%.

Full-year 2016 adjusted EPS came in at $5.55, marginally ahead of the Zacks Consensus Estimate of $5.50. Yearly earnings increased 8.8% year over year.

Total Revenue

Orbital ATK's total revenues in the fourth quarter came in at $1,272 million, beating the Zacks Consensus Estimate of $1,195 million by 6.4%.

Moreover, reported revenues were 11.1% higher than the year-ago figure of $1,145 million primarily due to improved sales from Flight Systems Group, Space Systems Group and Defense Systems Group, partially offset by an increase in corporate revenue eliminations.

Segmental Update

Flight Systems Group: Segment sales were up 4.6% year over year to $406 million owing to higher volume in the Launch Vehicles Division. Adjusted operating income climbed 2.1% to $53.2 million.

Defense Systems Group: The segment reported sales of $482 million, up 8.3% year over year due to higher activity on Armament Systems Division contracts. Adjusted operating income, however, decreased 22.6% to $47.0 million primarily owing to a favorable profit adjustment in 2015 that did not reoccur in 2016.

Space Systems Group: The segment reported sales of $424 million, up 29.3% year over year, due to higher activity on Advanced Programs Division and Satellite Systems Division contracts. Adjusted operating income surged 61.5% primarily on the back of favorable profit adjustments on certain Satellite Systems Division contracts in 2016.

Highlights of the Release

Total adjusted operating income in the fourth quarter fell 6% to $131.6 million.

As of Dec 31, 2016, Orbital ATK's firm backlog was approximately $9.34 billion, up 13% year over year. Total backlog (including options, indefinite quantity contracts and undefinitized orders) was approximately $14.36 billion, up 10%.

Financial Highlights

Adjusted free cash flow was $339.9 million for the reported quarter.

Capital expenditure was $84.5 million in the quarter.

Cash generated by operating activities came in at $414.7 million.

Orbital ATK, Inc. Price, Consensus and EPS Surprise

Orbital ATK, Inc. Price, Consensus and EPS Surprise | Orbital ATK, Inc. Quote

Guidance

The company has provided its 2017 earnings per share guidance in the range of $5.80–$6.20. Revenues are projected in the range of $4,550–$4,625 million.

Free cash flow is expected to be between $250 million and $300 million.

Peer Releases

Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) , reported fourth-quarter 2016 earnings from continuing operations of $3.25 per share, which surpassed the Zacks Consensus Estimate of $3.04 by 6.9%.

Textron Inc. (TXT - Free Report) reported fourth-quarter 2016 adjusted earnings from continuing operations of 80 cents per share that missed the Zacks Consensus Estimate of 87 cents by 8%.

General Dynamics Corp. (GD - Free Report) reported fourth-quarter 2016 earnings from continuing operations of $2.62 per share, which beat the Zacks Consensus Estimate of $2.54 by 3.1%.

Zacks Rank

Orbital ATK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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