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Here's Why You Should Invest in Aerojet Rocketdyne Stock

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Estimates for Aerojet Rocketdyne Holdings, Inc. have been revised upward in the past 60 days, which reflects analysts’ optimism in the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings moved up 24.5% and 9.0% to $1.27 and $ 1.33, respectively.

Growing demand in propulsion market and positive budgetary provisions for space launch system (SLS) are positives for Aerojet Rocketdyne.

Shares of Aerojet Rocketdyne have rallied 25.9% in the past six months compared with the industry’s rise of 7.7%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s focus on the factors that make Aerojet Rocketdyne a stock to invest in.

Surprise Trend & Year-Over-Year Growth Estimates

Aerojet Rocketdyne pulled off an average positive earnings surprise of 9.27% in the last four quarters. Year-over-year earnings growth for 2018 and 2019 is estimated at 71.62% and 4.33%, respectively. Year-over-year sales growth for 2018 and 2019 is projected at 2.95% and 4.21%, respectively.

VGM Score

Aerojet Rocketdyne has an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank are the best investment options.

Backlog & Long-Term Growth

Aerojet Rocketdyne’s total contract backlog at the end of the second quarter was $3.9 billion. Of this, funded backlog totaled $1.5 billion. The company has expected long-term earnings growth rate of 5.50%.

Cost Control & Debt Reduction

The company has been undertaking strategic initiatives to reduce costs and serve customers more efficiently. In this regard, the company introduced Competitive Improvement Program (CIP), Phase I of which was initiated in 2015, aimed at optimization of facilities and footprint reduction; product affordability; as well as reduced administrative and overhead costs. We expect these trends to boost the company’s performance in the long run.

The company is striving to reduce debt levels. Aerojet Rocketdyne’s long-term debt was $581 million as of Jun 30, 2018, down from $591.4 million as of Dec 31, 2017.

Other Stocks to Consider

A few other top-ranked stocks in the same sector are Huntington Ingalls Industries, Inc. (HII - Free Report) , Engility Holdings and FLIR Systems, Inc. . All three stocks carry a Zacks Rank #2 (Buy).

Huntington Ingalls came up with an average positive earnings surprise of 9.48% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings improved 6.3% to $17.24 in the past 60 days.

Engility Holdings delivered an average positive earnings surprise of 19% in the preceding four quarters. The Zacks Consensus Estimate for 2018 earnings moved up 16.1% to $2.02 in the past 60 days.

FLIR Systems pulled off an average positive earnings surprise of 8.94% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings inched up 1.4% to $2.22 in the past 60 days.

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