It has been about a month since the last earnings report for Rockwell Collins, Inc. . Shares have lost about 1% in the past month, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is COL due for a breakout? 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 Beats on Q1 Earnings, Sales Up Y/Y
Rockwell Collins reported results for first-quarter fiscal 2018 (ended Dec 31, 2017). The company’s adjusted earnings per share of $1.59 beat the Zacks Consensus Estimate of $1.53 by 3.9%. Reported earnings grew 30.3% from $1.22 a year ago.
Excluding one-time adjustments, the company’s earnings of $1.69 per share reflected a year-over-year improvement of 53.6%.
The year-over-year bottom-line growth was primarily driven by a tax benefit of 37 cents on account of the recent Tax Cuts and Jobs Act.
Revenues
In the reported quarter, Rockwell Collins’ total sales were $2,011 million, which beat the Zacks Consensus Estimate of $1,988 million by 1.2%. Revenues grew 69% year over year, driven by higher sales at Commercial Systems, Government Systems and Information Management Services segments.
Excluding revenues worth $716 million from the acquisition of B/E Aerospace, the company witnessed 9% organic sales growth.
Operational Highlights
Total segment operating income during the quarter was $371 million, up 47.8% from $251 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including increase in pre-production engineering costs) was $318 million, up 51.4%. The figure represented 15.8% of total sales compared with 17.6% in the year-ago quarter.
Interest expense during the quarter was $64 million compared with $20 million in the year-ago quarter.
Segment Performance
Commercial Systems: In the quarter under review, sales of $608 million were up 11% year over year owing to higher original equipment and aftermarket sales.
Operating earnings for the quarter were $139 million compared with $125 million in the year-ago quarter. Consequently, operating margin expanded 10 basis points (bps) to 22.9%.
Government Systems: The segment reported sales of $573 million, up 21% on the back of higher communication and navigation as well as avionics revenues.
Operating earnings for the quarter were $109 million, up 14% from $96 million in the year-ago quarter. However, operating margin contracted 120 bps to 19%.
Information Management Services: Segment sales were $174 million, up 3% from $169 million in the year-ago quarter, backed by growth in aviation related revenues.
Operating earnings for the quarter were $29 million, down from $30 million in the year-ago period. Operating margin was 16.7% compared with 17.8% a year ago. The downside was caused by asset disposition and customer bankruptcy costs.
Financial Condition
As of Dec 31, 2017, Rockwell Collins’ cash and cash equivalents were $583 million compared with $703 million as of Sep 30, 2017.
Long-term debt (net) was $6,498 million as of Dec 31, 2017, up from $6.676 million as of Sep 30, 2017.
Cash used for operating activities at the end of the quarter was $259 million, compared with 101 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
Fresh estimate followed an upward path over the past two months.
VGM Scores
Currently, COL has a poor Growth Score of F, however its Momentum is doing a bit better with a D. Following the exact same course, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% 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.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
COL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Rockwell Collins (COL) Down 1% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Rockwell Collins, Inc. . Shares have lost about 1% in the past month, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is COL due for a breakout? 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 Beats on Q1 Earnings, Sales Up Y/Y
Rockwell Collins reported results for first-quarter fiscal 2018 (ended Dec 31, 2017). The company’s adjusted earnings per share of $1.59 beat the Zacks Consensus Estimate of $1.53 by 3.9%. Reported earnings grew 30.3% from $1.22 a year ago.
Excluding one-time adjustments, the company’s earnings of $1.69 per share reflected a year-over-year improvement of 53.6%.
The year-over-year bottom-line growth was primarily driven by a tax benefit of 37 cents on account of the recent Tax Cuts and Jobs Act.
Revenues
In the reported quarter, Rockwell Collins’ total sales were $2,011 million, which beat the Zacks Consensus Estimate of $1,988 million by 1.2%. Revenues grew 69% year over year, driven by higher sales at Commercial Systems, Government Systems and Information Management Services segments.
Excluding revenues worth $716 million from the acquisition of B/E Aerospace, the company witnessed 9% organic sales growth.
Operational Highlights
Total segment operating income during the quarter was $371 million, up 47.8% from $251 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including increase in pre-production engineering costs) was $318 million, up 51.4%. The figure represented 15.8% of total sales compared with 17.6% in the year-ago quarter.
Interest expense during the quarter was $64 million compared with $20 million in the year-ago quarter.
Segment Performance
Commercial Systems: In the quarter under review, sales of $608 million were up 11% year over year owing to higher original equipment and aftermarket sales.
Operating earnings for the quarter were $139 million compared with $125 million in the year-ago quarter. Consequently, operating margin expanded 10 basis points (bps) to 22.9%.
Government Systems: The segment reported sales of $573 million, up 21% on the back of higher communication and navigation as well as avionics revenues.
Operating earnings for the quarter were $109 million, up 14% from $96 million in the year-ago quarter. However, operating margin contracted 120 bps to 19%.
Information Management Services: Segment sales were $174 million, up 3% from $169 million in the year-ago quarter, backed by growth in aviation related revenues.
Operating earnings for the quarter were $29 million, down from $30 million in the year-ago period. Operating margin was 16.7% compared with 17.8% a year ago. The downside was caused by asset disposition and customer bankruptcy costs.
Financial Condition
As of Dec 31, 2017, Rockwell Collins’ cash and cash equivalents were $583 million compared with $703 million as of Sep 30, 2017.
Long-term debt (net) was $6,498 million as of Dec 31, 2017, up from $6.676 million as of Sep 30, 2017.
Cash used for operating activities at the end of the quarter was $259 million, compared with 101 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
Fresh estimate followed an upward path over the past two months.
Rockwell Collins, Inc. Price and Consensus
Rockwell Collins, Inc. Price and Consensus | Rockwell Collins, Inc. Quote
VGM Scores
Currently, COL has a poor Growth Score of F, however its Momentum is doing a bit better with a D. Following the exact same course, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% 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.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
COL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.