Q4 Earnings: Can CUB Hit Its $1.95 EPS Target?

in EARNINGS/INVESTING IDEAS by

Cubic Corporation (NYSE:CUB) is scheduled to report Q4 earnings results on Wednesday, November 20, 2019, 5:00 p.m. ET. The company is expected to report earnings of $1.95/share on revenue of $441.5 million. The consensus earnings per share (EPS) of $1.95/share is based on a poll of 6 analysts and represents a growth of 143.1% over the same quarter last year when the company reported earnings of $0.80/share.

The revenue forecast of $441.5 million based on a poll of 6 analysts implies a year-over-year (YoY) growth of 16.3%. Last year the company reported $379.7 million in revenue for the quarter.

Expected to report EPS growth of $1.15/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $441.50 $379.71 16.3%
EPS $1.95 $0.80 143.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 2 out of the last 8 tracked quarters, and missed expectations 6 quarters. What are your expectations from Cubic for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.71 $0.66 -7.0% Missed
Q2, 2019 -$0.18 -$0.26 NM Missed
Q1, 2019 -$0.11 -$0.23 NM Missed
Q4, 2018 $0.98 $0.80 -18.4% Missed
Q3, 2018 $0.09 $0.03 -66.7% Missed
Q2, 2018 -$0.27 -$0.12 NM Beat
Q1, 2018 -$0.07 -$0.36 NM Missed
Q4, 2017 $0.28 $0.49 75.0% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Cubic’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 13.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-06 $63.36 $71.90 13.5% Increase
2019-05-02 $56.15 $59.68 6.3% Increase
2019-02-06 $65.25 $59.37 -9.0% Decline
2018-11-15 $63.93 $68.29 6.8% Increase

Fundamentals And Technical Analysis

Cubic is currently trading at $73.54/share, up 1.1% for the day. The company is trading at approximately 98.3% of its 52-week high of $74.84/share. The company’s 14 Day Relative Price Index (RSI) of 59.82 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 95.3x and a forward P/E multiple of 23.4x. Cubic’s current share price also implies a price-to-book (P/B) multiple of 2.4x. The following table summarizes some other key fundamental ratios:

Data as of November 20, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 30, 2019
Stock Price (Current) $73.54
P/E Ratio 95.3x
P/E Ratio (Fwd) 23.4x
PEG Ratio 0.8
Total Debt to Capital (%) 17.6%
Levered Free Cash Flow -$92.264 million
Enterprise Value / EBITDA 26.8x

Company Profile: Cubic Corporation

Cubic Corporation is a mid-cap stock with a market capitalization of $2.268 billion and a total enterprise value of $2.719 billion. The company operates in the Industrials sector and the Aerospace & Defense industry.

Cubic Corporation provides various integrated solutions worldwide. Its solutions enhance the situational understanding of transportation, defense, and training customers, as well as for command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) customers. The company operates through three segments: Cubic Transportation Systems (CTS), Cubic Global Defense Systems (CGD), and Cubic Mission Solutions (CMS).

The CTS segment integrates payment and information technology and services for intelligent travel solutions. It delivers integrated systems for transportation and traffic management; and tools for travelers to choose the smartest and easiest way to travel and pay for their journeys, as well as enables transportation authorities and agencies to manage demand across the entire transportation network.

The CGD Systems segment supplies live, virtual, constructive, and game-based training solutions to the U.S. Department of Defense, other U.S. government agencies, and allied nations.

The CMS segment offers networked C4ISR solutions for defense, intelligence, security, and commercial missions.

The company was incorporated in 1949 and is headquartered in San Diego, California.

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