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Rockwell Collins' (COL) Q3 Earnings: What's in the Cards?

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Rockwell Collins Inc. is expected to report third-quarter fiscal 2018 results on Jul 27, before the opening bell.

The aviation electronics maker posted positive earnings surprise of 3.43% in the last reported quarter. Impressively, Rockwell Collins surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 2.79%.

Let’s take a detailed look at the factors influencing Rockwell Collins' quarterly results.

Factors to Consider

During the fiscal third quarter, the Australian Army selected Rockwell Collins to provide extended avionics support for its fleet of CH-47F Chinook helicopters, through a performance-based logistics (PBL) contract. The company was also selected by CAE to provide its Panorama collimated display for the CC-295 full-flight simulator (FFS).

Moreover, the company won multiple repair contracts from the U.S. Air Force to support Global Air Traffic Management (GATM) components on the entire KC-135 tanker fleet. We may expect these orders to boost the company’s top line and consequently its bottom line in the to-be-reported quarter. In line with this, the Zacks Consensus Estimate for the company’s fiscal third-quarter sales of $2.24 billion reflects an annual increase of 6.9%, while that for the earnings of $1.89 per share reflects a 15.25% year-over-year rise.

In September 2017, United Technologies Corporation entered into an agreement to acquire Rockwell Collins for $30 billion. The deal is expected to create one of the world’s largest aircraft-equipment manufacturers.

Notably, shareholders of Rockwell Collins will be given all-cash consideration of $140 per share, reflecting a premium of nearly 7.5% from the company’s closing price of $130.29 on Sep 1, 2017. Moreover, majority of shareholders of Rockwell Collins have overwhelmingly voted in favor of the company's acquisition by United Technologies. We may expect further development on this upcoming merger, once the company releases its fiscal third-quarterly results.

Rockwell Collins, Inc. Price and EPS Surprise

 

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

Earnings Whispers

Our proven model does not show that Rockwell Collins is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Rockwell Collins has an Earnings ESP of -3.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Rockwell Collins carries a Zacks Rank #3, which increases the probability of earnings beat. But when combined with a negative Earnings ESP, the Zacks Rank #3 makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock That Warrants a Look

Here's a company in the Aerospace sector that has the right combination of elements to post an earnings beat this quarter.

Raytheon Company has an Earnings ESP of +0.38% and a Zacks Rank #2. The company is expected to report second-quarter results on Jul 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Releases

Lockheed Martin (LMT - Free Report) reported second-quarter 2018 adjusted earnings of $4.31 per share, beating the Zacks Consensus Estimate of $3.89 by 10.8%.

Textron (TXT - Free Report) reported second-quarter 2018 earnings from continuing operations of 87 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 24.3%. The bottom line also increased 52.6% from 57 cents in the year-ago quarter.

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