Integrated power solutions provider to the civil and defense
aerospace, marine and energy markets,
Rolls Royce Holdings plc
) will release its first half 2014 financial results on Jul 31,
2014. Let's see how things are shaping up for this announcement.
Factors Influencing This Quarter
Rolls Royce is the second largest aircraft engine producer after GE
Aviation Systems, an operating unit of
General Electric Company
). With growing commercial air passenger traffic, the company's
Aerospace division can further improve the profitability of its
passenger jet engine business. Rolls Royce is also seeking new
sources of growth.
The fast developing market for military drones will also generate
revenues for Rolls Royce. The company supplies engines for Northrop
Grumman Corp.'s Global Hawk, an unmanned surveillance aircraft.
As discussed above, Rolls Royce's civil aerospace unit - the
group's largest revenue generator - stands to gain from increased
production of passenger jets by the aerospace giants Airbus and
The Boeing Co.
). The company is also manufacturing engines for a prototype
unmanned combat aircraft that is being developed by a consortium
led by BAE Systems.
In spite of the favorable commercial market Rolls Royce surprised
investors with its outlook for flat revenue and profit growth this
year. Moreover, considering the U.S. government's tepid budget
picture, it expects defense revenue and profit to fall up to 20%.
The company expects to return to growth in 2015.
Also, the terminated Skymark Airlines order for six A380 planes
would hit Rolls Royce's order book by 0.5%. Airbus Group, the maker
of the A380, had terminated a deal to deliver the jets to Skymark
as the carrier was unable to raise enough funds to pay for the
installments. Rolls-Royce was entitled to deliver the engines for
the jets as well as provide maintenance services once operational.
Our proven model does not conclusively show that Rolls Royce is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
The earning ESP stands at 0.00%.
Rolls Royce has a Zacks Rank #4 (Sell) which lowers the predictive
power of the ESP. We caution against stocks with a Zacks Rank #4
and 5 (Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows
that these have the right combination of elements:
Alliant Techsystems Inc. (
) has an earnings ESP of +4.08% and carries a Zacks Rank #1 (Strong
Curtiss-Wright Corp. (
) has an earnings ESP of +1.28% and carries a Zacks Rank #2 (Buy).
Spirit AeroSystems Holdings, Inc. (
) has an earnings ESP of +5.80% and carries a Zacks Rank #2
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