Aerojet Rocketdyne (AJRD) Up 4.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Aerojet Rocketdyne Holdings (AJRD). Shares have added about 4.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aerojet Rocketdyne due for a pullback? 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.

Aerojet Rocketdyne Q1 Earnings Lag Estimates, Fall Y/Y

Aerojet Rocketdyne reported first-quarter 2020 earnings per share (EPS) of 37 cents, which missed the Zacks Consensus Estimate of 46 cents by 19.6%. The bottom line also declined 21.3% year over year from 47 cents reported in the year-ago quarter.

Operational Performance

The company’s first-quarter revenues of $476.1 million declined 3.2% from the year-ago quarter’s $491.7 million. Moreover, the top line lagged the Zacks Consensus Estimate of $517 million by 7.9%. The decrease in net sales was primarily led by a decline in space program sales.

Aerojet Rocketdyne’s backlog at the end of first-quarter 2020 totaled $5.2 billion, lower than $5.4 billion at the end of 2019. Of this, funded backlog amounted to $3.3 billion compared with $2.1 billion at 2019-end.

Total operating expenses decreased 2.2% to $419 million in the first quarter. Meanwhile, operating income of $57.1 million declined 9.8% from $63.3 million a year ago.

Segmental Performance

Aerospace & Defense: Revenues at this segment declined 3.2% year over year to $474.4 million from the previous year’s $490 million.

Real Estate: The segment generated revenues of $1.7 million, which remained in line with the year-ago quarter’s figure.

Financial Update

Aerojet Rocketdyne exited the first quarter with cash and cash equivalents of $902.6 million, down from $932.6 million as of Dec 31, 2019.

Long-term debt amounted to $345.3 million, down from $352.3 million as of Dec 31, 2019.

Operating cash outflow from continuing operations summed $17.1 million as of Mar 31, 2020, compared with cash outflow of $95.4 million in the year-ago period.

Free cash outflow at the end of the reported quarter was $20.1 million compared with $19.2 million a year ago.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -8.27% due to these changes.

VGM Scores

Currently, Aerojet Rocketdyne has a subpar Growth Score of D, however its Momentum Score is doing a bit better 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Aerojet Rocketdyne has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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