It has been about a month since the last earnings report for Orbital ATK, Inc. (NYSE:OA) . Shares have lost about 3.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Orbital ATK Q4 Earnings Miss Estimates, Gives ’17 View
Orbital’sfourth-quarter 2016 adjusted earnings of $1.26 per share missed the Zacks Consensus Estimate of $1.45 per share by 13.1%.Reported earnings also fell 12.5% from the year-ago tally of $1.44.
Full-year 2016 adjusted EPS came in at $5.55, marginally ahead of the Zacks Consensus Estimate of $5.50. Yearly earnings increased 8.8% year over year.
Total Revenue
Orbital ATK's total revenues in the fourth quarter came in at $1,272 million, beating the Zacks Consensus Estimate of $1,195 million by 6.4%.
Moreover, reported revenues were 11.1% higher than the year-ago figure of $1,145 million primarily due to improved sales from Flight Systems Group, Space Systems Group and Defense Systems Group, partially offset by an increase in corporate revenue eliminations.
Segmental Update
Flight Systems Group: Segment sales were up 4.6% year over year to $406 million owing to higher volume in the Launch Vehicles Division. Adjusted operating income climbed 2.1% to $53.2 million.
Defense Systems Group: The segment reported sales of $482 million, up 8.3% year over year due to higher activity on Armament Systems Division contracts. Adjusted operating income, however, decreased 22.6% to $47.0 million primarily owing to a favorable profit adjustment in 2015 that did not reoccur in 2016.
Space Systems Group: The segment reported sales of $424 million, up 29.3% year over year, due to higher activity on Advanced Programs Division and Satellite Systems Division contracts. Adjusted operating income surged 61.5% primarily on the back of favorable profit adjustments on certain Satellite Systems Division contracts in 2016.
Highlights of the Release
Total adjusted operating income in the fourth quarter fell 6% to $131.6 million.
As of Dec 31, 2016, Orbital ATK's firm backlog was approximately $9.34 billion, up 13% year over year. Total backlog (including options, indefinite quantity contracts and undefinitized orders) was approximately $14.36 billion, up 10%.
Financial Highlights
Adjusted free cash flow was $339.9 million for the reported quarter.
Capital expenditure was $84.5 million in the quarter.
Cash generated by operating activities came in at $414.7 million.
Guidance
The company has provided its 2017 earnings per share guidance in the range of $5.80–$6.20. Revenues are projected in the range of $4,550–$4,625 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Orbital ATK, Inc. Price and Consensus
Orbital ATK, Inc. Price and Consensus | Orbital ATK, Inc. Quote
VGM Scores
At this time, Orbital's stock has a subpar Growth Score of 'D', however its momentum is doing a bit better with a 'C'. Following a similar course, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for value than momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Orbital ATK, Inc. (OA): Free Stock Analysis Report
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