Rockwell Collins Inc.
(
COL
), the supplier of avionics and military equipment, announced that
it would release its results for the first quarter of 2012 ending
on December 31, 2011, before the market opens on January 19,
2012.
Earlier, Rockwell in the fourth quarter of 2011 ending on
September 30, 2011, reported adjusted earnings per share of $1.02
per share short of theZacks Consensus Estimate of $1.14. However,
results comfortably beat the year-ago quarterly earnings per share
of $0.93.
With respect to earnings surprises, the company was behind
theZacks Consensus Estimate in the trailing two quarters. However,
Rockwell was in-line with theZacks Consensus Estimate for the
quarter ending on March 31, 2011. This is reflected in the average
earnings surprise of -1.02%, with negative surprises in two
quarters and positive in two.
Last Quarterly Review
Rockwell Collins' total sales in the fourth quarter of 2011
ending on September 30, 2011, was $1.3 billion short of theZacks
Consensus Estimate by $18 million. However, it exceeded the
year-ago figure of $1.27 billion.
The top-line was driven by an increase in Commercial Systems
sales offset by a lackluster Government Systems performance. Total
quarterly segment operating earnings were $271 million, up 9.3%
year over year. Overall, Rockwell Collins reported a net income of
$175 million, an increase of $25 million year over year.
Commercial Systems:
Commercial Systems sales were up $44 million to $517 million in the
reported quarter, compared with $473 million in the year-ago
quarter.
By product category, sales related to aircraft original
equipment manufacturers increased $37 million to $268 million year
over year driven by higher product deliveries for the Bombardier
Global platform and increased sales of avionics to air transport
OEMs resulting from higher aircraft production rates.
Aftermarket sales increased $6 million to $214 million year over
year primarily driven by increased service and support sales.
However, this was partially offset by the absence of Project
Liberty spares delivered in fourth quarter 2010.
Government Systems:
Government Systems sales fell $19 million year over year to $779
million in the fourth quarter 2011.
By product category, Avionics sales increased $4.0 million year
over year to $414 million on the back ofKC-46A tanker and the E-6
aircraft upgrade programs, partly offset by the completion of
deliveries for the KC-135GATM program. Communication product sales
declined by $14 million to $188 million due to the completion of
deliveries last year for two satellite communication upgrade
programs.
Surface solutions sales increased $2 million to $97 million as a
result of increased deliveries of public safety vehicle systems and
increased revenue for the Common Range Integrated Instrumentation
System program, partially offset by two programs terminated for
convenience in the third quarter. Sales of Navigation products
decreased by $11 million to $80 million due to fewer deliveries of
Defense Advanced GPS Receiver products.
Agreement of Estimate Revisions
For the quarter ending on December 31, 2011, 1 out of 17
analysts covering the stock have made a downward revision in the
last 30 days and none made any downward revision in the last 7
days. None of the analysts have made any upward revision in the
last 30 days.
Magnitude of Estimate Revisions
For the quarter ending on December 31, 2011, estimate was 87
cents per share in the last 30 days and inched down by one penny to
86 cents per share owing to the lone downward revision. TheZacks
Consensus Estimate for the aforementioned quarter is 9.99%, down
from the year-ago quarter.
Our Take
Rockwell Collins is a leading global provider of communication
and aviation electronic solutions for commercial and government
customers. Its aircraft electronics are installed in business as
well as commercial aircraft cockpits and cabins of nearly every
airline in the world. Additionally, its airborne and ground-based
communication systems transmit approximately 70% of all U.S. and
allied military airborne communications.
Rockwell Collins expects that the balance and diversity of its
business will likely enable continued revenue growth for
fiscal-year 2012 driven by the strength of commercial markets. It
also expects to realize additional operating margin expansion, cash
flow generation aligned with long-term goals, and earnings per
share growth at more than three times the rate of sales growth.
We however expect the quarter ending on December 31, 2011, would
be a slow quarter. Performance would be down in the Government
Systems segment and will only improve in the second half of the
ongoing fiscal. The downcast view comes on the heels of
thecancellation of three programs in 2011 and lower sales of
Defense Advanced GPS Receiver program.
In the near term, we expect the saving grace for the company to
be the Commercial Systems segment and ongoing share repurchase
program. To fuel the growth in EPS the company issued $250 million
of Notes in December to fund its share repurchase program.
Currently, Rockwell has a short-term (1 to 3 months)Zacks #3
Rank (Hold) and a long-term (6 months) Neutral recommendation. This
is in-line with its peers like
AeroVironment Inc.
(
AVAV">AVAV
) and
Alliant Techsystems Inc.
(
ATK">ATK
).
ALLIANT TECHSYS (
ATK
): Free Stock Analysis Report
AEROVIRONMENT (
AVAV
): Free Stock Analysis Report
ROCKWELL COLLIN (
COL
): Free Stock Analysis Report
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