Rockwell Collins' (COL) Q4 Earnings: What's in the Cards?

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Rockwell Collins Inc. COL is expected to report fourth-quarter and fiscal 2018 results on Oct 26.

Last reported quarter, this aviation electronics maker came up with a negative earnings surprise of 8.47%. Moreover, Rockwell Collins lagged the Zacks Consensus Estimate in one of the trailing four quarters with an average miss of 0.28%.

Let's take a detailed look at the factors influencing Rockwell Collins' quarterly results.

Rockwell Collins, Inc. Price and EPS Surprise

Rockwell Collins, Inc. Price and EPS Surprise | Rockwell Collins, Inc. Quote

Factors to Consider

During the fiscal fourth quarter, Rockwell Collins won a $289-million modification contract for the manufacture and delivery of the AN/ARC-210 radio equipment systems. The company also won a handful of other multi-million contracts in the soon-to-be-reported quarter.

As a result, we hope these orders have likely boosted the company's top and the bottom line in the upcoming quarterly release. In line with this, the Zacks Consensus Estimate for the company's fiscal fourth-quarter sales of $2.32 billion reflects an annual increase of 5.8% while the same for earnings of $2.02 per share depicts a 12.2% year-over-year rise.

In September 2017, United Technologies Corporation entered into an agreement to acquire Rockwell Collins for $30 billion. The deal is anticipated to create one of the world's largest aircraft-equipment manufacturers.

Notably, shareholders of Rockwell Collins will be provided with an all-cash consideration of $140 per share, indicating a premium of nearly 7.5% from the company's closing price of $130.29 on Sep 1, 2017. Moreover, majority of Rockwell Collins shareholders have overwhelmingly voted in favor of the company's probable acquisition by United Technologies. In October 2018, the U.S. government gave its nod to this deal. We might estimate further development on this impending merger, once the company releases its fiscal-fourth quarter earnings performance.

Earnings Whispers

Our proven model does not conclusively show that Rockwell Collins is likely to beat on earnings this reporting season. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below. You can see the complete list of today's Zacks #1 Rank stocks here .

Earnings ESP: Rockwell Collins has an Earnings ESP of -1.83%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Rockwell Collins carries a Zacks Rank #2, which increases the predictive power of ESP. But when combined with a negative Earnings ESP, surprise prediction is left inconclusive.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

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

Raytheon Company RTN is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +1.07% and a Zacks Rank of 2.

Transdigm Group TDG is expected to report third-quarter 2018 results on Nov 8. The company has an Earnings ESP of +0.78% and is a Zacks #2 Ranked player.

FLIR System, Inc. FLIR is expected to report third-quarter 2018 results on Oct 30. The company has an Earnings ESP of +0.30% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: TDG , RTN , FLIR

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