For five quarters running, rocket maker Orbital Sciences
What analysts say:
- Buy, sell, or waffle? Six out of seven analysts polled rate Orbital a buy. The other guy has it parked in a holding orbit.
- Revenue. On average, they're looking for quarterly sales to fall 4% to $277.8 million.
- Earnings. Profits are predicted to drop 23% to $0.20 per share.
What management says:
Orbital's been busy these past few months, but you wouldn't know it from the firm's SEC pages. 8-K filings are rarer than a blue moon over there, so to get the skinny on happenings at this firm, you need to train your telescope on Yahoo! Finance, and keep a sharp eye out for press releases announcing news like last month's Minotaur II+ launch in support of the Air Force's NFIRE program, the award of a new Minotaur IV launch contract, also for the Air Force, and the August contract to build a new comm bird for Intelsat.
What management does:
Orbital's been going through a bit of a profits slump over the past 18 months as its cost of goods sold keeps eating away at the gross margin. SG&A seem remarkably consistent, however, varying little from quarter to quarter, while R&D spending has tripled through the first half of this year, as compared to H1 2007. All of this has Orbital's operating margins hovering at a level well below what peers Northrop Grumman
3/07 |
6/07 |
9/07 |
12/07 |
3/08 |
6/08 |
|
---|---|---|---|---|---|---|
Gross |
19.1% |
18.3% |
17.6% |
17.3% |
17.3% |
17.9% |
Operating |
8.3% |
8.2% |
8.2% |
8.0% |
7.8% |
8.0% |
Net |
4.5% |
4.7% |
5.0% |
5.2% |
5.1% |
6.0% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
On the plus side, Orbital continues to generate free cash flow in abundance -- well above the levels of profitability that its GAAP numbers might suggest. Over the past 12 months, Orbital has collected just under $92 million in free cash flow.
I have to say that the resulting price-to-free cash flow ratio on this one -- 12 times -- looks mighty attractive relative to analysts' projected 18% long-term growth rate. I don't throw the term "dirt cheap" around lightly, but Orbital is starting to look worthy of the title.
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