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Orbital ATK (OA) Q2 Earnings Preview: What to Expect? - Analyst Blog

Orbital ATK, Inc.OA is scheduled to release its second-quarter 2015 financial results before the opening bell on Aug 6, 2015.

Last quarter, the company delivered a positive earnings surprise of 3.64%. Let's see how things are shaping up for this announcement.

Factors at Play

The diverse product offerings of Orbital ATK are a catalyst. The company continues to support the National Aeronautics and Space Administration's (NASA) missions by providing accessories either as the prime contractor or through merchant suppliers.

In the second quarter, Orbital ATK received a $27 million contract for the production order of the DSU-33D/B proximity sensor from the U.S. Army to meet additional Air Force requirements. Apart from this, the company received $120 million caliber ammunition and $90 million contract from Lockheed Martin Corp. LMT to provide the Attitude Control Motor for Orion's Launch Abort System (LAS). A continuous inflow of contracts will keep the order book ticking and boost the top line.

However, defense is a highly competitive sector, which is evolving rapidly. In addition, Orbital ATK utilizes a variety of raw materials to manufacture its end products. Increasing price of raw materials and disruptions in supply could have an adverse impact on the company's results.

Earnings Whispers?

Our proven model does not conclusively show that Orbital ATK is likely to beat earnings as it lacks the required combination of two key ingredients. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass earnings estimates. However, that is not the case here.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are at $1.02 per share.

Zacks Rank: Orbital ATK has a Zacks Rank #4 (Sell), which dampens the probability of an earnings beat this season.

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

Peer Releases

Here are two big players in the aerospace and defense space which posted an earnings beat in the second quarter.

Northrop Grumman Corporation NOC reported second-quarter 2015 adjusted earnings of $2.47 per share, beating the Zacks Consensus Estimate of $2.33 by 6%.

Raytheon Company RTN reported second-quarter 2015 earnings from continuing operations of $1.65 per share, beating the Zacks Consensus Estimate of $1.63 by 1.2%.

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NORTHROP GRUMMN (NOC): Free Stock Analysis Report

RAYTHEON CO (RTN): Free Stock Analysis Report

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

ORBITAL ATK INC (OA): Free Stock Analysis Report

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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.


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

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