Astronics (ATRO) To Report Q3 Earnings: What's In The Cards?

Astronics Corporation (NASDAQ:ATRO) is set to report third-quarter 2019 financial results on Nov 5, before market open.

In the last reported quarter, the company delivered a negative earnings surprise of 45.71%. However, it came up with an average trailing four-quarter beat of 0.09%.

Let's take a closer look at how things have shaped up prior to the announcement.

Factors to Consider

A persistent decline in deliveries of Boeing (NYSE:BA) 737 Max jets is expected to have hurt the company’s revenues in the third quarter. With no surety about the return of this jet family to service anytime soon, Boeing slashed its production rate for 737 in April, which is also likely to have impacted Astronics’ top line in the soon-to-be-reported quarter. Moreover, the company has been witnessing a slowdown in demand for connectivity hardware, which, in turn, may have hurt its sales growth.

Considering the aforementioned factors, we remain skeptical about the company’s top line performance in the third quarter. The Zacks Consensus Estimate for third-quarter revenues is pegged at $168.1 million, indicating 21% decline from the year-ago quarter’s reported figure.

However, the company’s restructuring initiatives are expected to have provided approximately $3 million in annual savings for its Aerospace segment during the third quarter of 2019. But Astronics estimates loss on sale of approximately $1.3 million. This loss is on account of the divestiture of the company’s intellectual property and certain assets associated with its Airfield Lighting product line in July.

Moreover, the sale of its semiconductor test business in February is likely to have unfavorably impacted the company’s earnings in the third quarter. Further, an unusual satellite failure in the recent past has delayed Astronics’ business jet antenna program, which, in turn, is likely to have marred its third-quarter performance.

Cumulatively, these unfavorable factors are expected to have dragged down Astronics’ bottom line in the soon-to-be-reported quarter. Currently, the Zacks Consensus Estimate for the company’s third-quarter earnings, pegged at 28 cents, implies 46.2% decline from the year-ago quarter’s reported number.

In September, Astronics announced that its management has approved a new share repurchase program, aggregating up to $50 million of its outstanding common stock. Such capital deployment strategy hints at solid cash generation capacity for the company, which we expect the upcoming quarterly result to duly reflect.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Astronics this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Astronics has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Astronics currently carries a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Here are some companies in the Zacks Aerospace sector that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is slated to report third-quarter 2019 results on Oct 31. The company has an Earnings ESP of +0.29% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls Industries, Inc. (NYSE:HII) is scheduled to report third-quarter 2019 results on Nov 7. The company has an Earnings ESP of +2.09% and a Zacks Rank #3.

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