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Aerojet Rocketdyne (AJRD) Down 1.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Aerojet Rocketdyne Holdings (AJRD - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Aerojet Rocketdyne 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 drivers.

Aerojet Rocketdyne Q3 Earnings Top, Backlog Slips

Aerojet Rocketdyne reported third-quarter 2018 adjusted earnings of 42 cents per share, surpassing the Zacks Consensus Estimate of 30 cents by 40%.

Barring one-time adjustments, the company reported GAAP earnings of 82 cents per share, reflecting a massive growth from17 cents registered in the year-ago quarter. This upside can be attributed to robust sales growth and improved operating income in the reported quarter.

Operational Performance

In the quarter under review, the company’s revenues of $498.8 million witnessed a 3% year-over-year growth. The reported figure also surpassed the Zacks Consensus Estimate of $478 million by 4.4%.

Aerojet Rocketdyne’s total backlog at the end of the third quarter was $3.7 billion, which came slightly lowerthan $3.9 billion at the end of second quarter. Of this, funded backlog totaled $1.6 billion compared with $1.5 billion at second-quarter end.

Total operating expenses declined 11.4% to $390.5 million in the third quarter. Operating income of $108.3 million improved a solid 148.4% from $43.6 million a year ago.

Segmental Performance

Aerospace &Defense: The segment’s revenues were up 3% year over year to $497.2 million.The upside was driven by increased deliveries in terms of the Standard Missile, Guided Multiple Launch Rocket System, Terminal High Altitude Area Defense and Patriot Advanced Capability-3 programs.

The segment margin too expanded 1220 basis points (bps) to 21.7%, on account of risk retirements derived from RS-68 and RL-10 programs.

Retail Estate: The segment’s revenues of $1.6 million came in line with the year-ago quarter’s top-line figure.

Financial Update

Aerojet Rocketdyne exited the third quarter with cash and cash equivalents of $608.6 million, up from $535 million as of Dec 31, 2017.

Long-term debt amounted to $356.4 million, down from $591.4 million as of Dec 31, 2017.

Operating cash flow from continuing operations was $97 million as of Sep 30, 2018 compared with cash flow of $25.9 million in the year-ago period.

Free cash inflow at the end of the third quarter was $63.8 million compared to the year-ago quarter’s free cash outflow of $16.2 million.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

Currently, Aerojet Rocketdyne has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.


Aerojet Rocketdyne has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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