Back to top

Analyst Blog

Zacks Equity Research

Rockwell Collins (COL) Tops Q2 Earnings, Revises FY17 View

COL TGI SPR RTN

Trades from $3

Rockwell Collins Inc. (COL - Free Report) 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.

Rockwell Collins, Inc. Price, Consensus and EPS Surprise

 

Rockwell Collins, Inc. Price, Consensus and EPS Surprise | Rockwell Collins, Inc. Quote

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.

Zacks Rank

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

Upcoming Peer Releases

Raytheon Company (RTN - Free Report) is scheduled to release first-quarter 2017 earnings on Apr 27. This Zacks Rank #3 company’s Zacks Consensus Estimate is pegged at $1.60.

Spirit AeroSystems Holdings, Inc. (SPR - Free Report) , another Zacks Rank #3 stock, is scheduled to release first-quarter earnings on May 5. The Zacks Consensus Estimate is pegged at $1.16.

Triumph Group, Inc. (TGI - Free Report) is expected to release first-quarter earnings on May 3. Its Zacks Consensus Estimate is pegged at $1.60. This  company also carries a Zacks Rank #3.

More Stock News: 8 Companies Verge on Apple-Like Run

Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.

A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>