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Market Expectations from Rockwell Collins in Its 3Q16 Earnings

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Nov. 20 2020, Updated 11:53 a.m. ET

Rockwell Collins to declare 3Q16 earnings

Rockwell Collins (COL), which makes avionics (XAR) for commercial and military aircraft (PPA), is scheduled to declare its 3Q16 earnings on July 25. The 3Q16 earnings release of Rockwell Collins is a snapshot of the company’s operating performance in the three-month period from April–June 2016.

Among its peers, General Electric (GE) and Honeywell (HON) are slated to declare their 2Q16 earnings on July 22. United Technologies (UTX) will declare its 2Q16 earnings on July 26.

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Tax credits to propel earnings in 3Q16

The consensus estimate among Wall Street analysts is for Rockwell Collins’s (COL) adjusted EPS (earnings per share) to rise by 19% on a year-over-year basis to $1.58. Analysts expect revenues to increase by 4.2% to ~$1.4 billion in 3Q16.

Rockwell Collins was able to increase its earnings in 2Q16. This occurred despite a sales drop due to the extension of the US research and development tax credit, which reduced its effective tax rate from 32.4% in 2Q15 to 26.8% in 2Q16.

The company expects these tax credits to accrue in the third quarter as well, which would reduce the tax rates to the mid-teens. Full-year tax rates are expected to be ~22%–23%. These credits are one-off gains, and the tax rate is expected to return to 30% in the next fiscal year.

Rockwell Collins’s fiscal 2016 forecast

In its last earnings call, the management of Rockwell Collins reaffirmed its annual guidance. The company expects adjust its EPS in fiscal 2016 to range between $5.45–$5.65 compared to its fiscal 2015 EPS of $5.05. Revenues for the year are expected to grow by 2.7%–4.7% to $5.3 billion–$5.4 billion.

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