Why Applied Aerospace & Defense Was Sliding This Week
Key Points
Uncomfortably, that earnings report was its first as a publicly traded company.
On the bright side, all three of its business units boosted their revenue.
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On Tuesday, Applied Aerospace & Defense (NYSE: AADX) released its first quarterly earnings report as a publicly traded company. This wasn't necessarily a memorable occasion, as it fell well short of analyst bottom-line estimates.
Investors aggressively sold the stock to leave it dangling below the $20 per share IPO price. According to data compiled by S&P Global Market Intelligence, as of early Friday afternoon, the company's shares were down by nearly 15% week to date.
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Inauspicious debut
Applied Aerospace took the wraps off its second quarter on Tuesday. The company, which is notable for being a supplier of advanced components to the high-profile Space Exploration Technologies, or SpaceX, earned just over $167 million in revenue. That was up by 47% year over year.
Image source: Getty Images.
However, net loss under generally accepted accounting principles (GAAP) deepened considerably, to almost $154 million ($1.04 per share) from the year-ago deficit of under $4.7 million. Management attributed this mainly to share-based compensation and transaction costs related to the IPO, which occurred in June.
That bottom-line result was well below the $0.01-per-share consensus analyst estimate. At least Applied Aerospace topped the average pundit forecast of under $156 million for revenue.
The company wrote that supplying SpaceX's Falcon 9 rockets, plus increased business with peer space company Blue Origin, increased the space and launch systems segment's revenue by almost 60% to $38.8 million.
Applied Aerospace's two other business units, CISR and precision strike systems, and defense aviation and airborne systems, also saw gains. The former's take rose more than fourfold to almost $50 million, while the latter's inched up 5% to nearly $79 million.
A bargain buy?
Applied Aerospace also proffered full-year guidance of $670 million to $690 million for revenue, and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization of $150 million to $155 million.
While I wouldn't be happy about those IPO-related costs if I were a shareholder, I'd be optimistic that they won't repeat. Meanwhile, since two out of the three company segments saw impressive revenue gains, I'd say this company's stock is one to consider owning amid the current price slump.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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