Advertisement
Canada markets close in 3 hours 45 minutes

  • S&P/TSX

    21,818.07
    -55.65 (-0.25%)
     

  • S&P 500

    5,019.20
    -52.43 (-1.03%)
     

  • DOW

    37,914.15
    -546.77 (-1.42%)
     

  • CAD/USD

    0.7302
    +0.0004 (+0.06%)
     

  • CRUDE OIL

    82.52
    -0.29 (-0.35%)
     

  • Bitcoin CAD

    87,744.95
    -938.45 (-1.06%)
     

  • CMC Crypto 200

    1,385.99
    +3.42 (+0.25%)
     

  • GOLD FUTURES

    2,342.00
    +3.60 (+0.15%)
     

  • RUSSELL 2000

    1,969.03
    -26.39 (-1.32%)
     

  • 10-Yr Bond

    4.7020
    +0.0500 (+1.07%)
     

  • NASDAQ

    15,486.96
    -225.79 (-1.44%)
     

  • VOLATILITY

    16.54
    +0.57 (+3.57%)
     

  • FTSE

    8,078.86
    +38.48 (+0.48%)
     

  • NIKKEI 225

    37,628.48
    -831.60 (-2.16%)
     

  • CAD/EUR

    0.6810
    -0.0009 (-0.13%)
     
MARKETS LIVE BLOG:

STOCKS SLIDE AFTER META'S REALITY CHECK, WITH GDP ON DECK

Owner of Facebook and Instagram plans to spend up to US$10B on AI infrastructure investments

Defense Stock Roundup: BA Beats on Q1 Earnings, GD, NOC Miss

Zacks Equity Research
·4 min read

Following dismal Q1 numbers, the major indices of the Aerospace-Defense space performed poorly over the trailing five trading sessions. Notably, the S&P 500 Aerospace & Defense (Industry) index dipped 1.3%, while the Dow Jones U.S. Aerospace & Defense index declined 6% in the aforementioned time period.

In the past week, quarterly results from a number of Aerospace-Defense majors namely, The Boeing Company BA, General Dynamics Corp. GD, Northrop Grumman Corp. NOC and Textron Inc. TXT drew investors’ focus.

Recap of Past Week’s Important Stories

1.    Boeing’s adjusted loss of $1.70 per share for first-quarter 2020 came in narrower than the Zacks Consensus Estimate of a loss of $2.04. The bottom line however deteriorated significantly from earnings of $3.16 in the year-ago quarter.

The company’s revenues amounted to $16.91 billion, which missed the Zacks Consensus Estimate by 1.6%. The top line also plunged 26% year over year.

Adverse impacts of the coronavirus pandemic along with poor 737 deliveries remained the major growth inhibitor for this jet maker’s dismal Q1 performance. Boeing exited the first quarter with cash and cash equivalents of $15.04 billion and short-term and other investments of $0.49 billion (read more: Boeing Q1 Earnings Top, Decline Y/Y on Coronavirus Woes).

2.    General Dynamics’ first-quarter 2020 earnings from continuing operations of $2.43 per share missed the Zacks Consensus Estimate by 1.2%. Moreover, earnings declined 5.1% from the year-ago quarter.

Its revenues of $8,749 million missed the Zacks Consensus Estimate by 5.8% and declined 5.5% year over year. However, the company recorded a total backlog of $85.7 billion, up 23.9% year over year.

As of Mar 31, 2020, General Dynamics’ cash and cash equivalents were $5,330 million compared with $902 million as of Dec 31, 2019 (read more: General Dynamics Q1 Earnings & Revenues Miss Estimates).

3.    Northrop Grumman’s first-quarter 2020 earnings of $5.15 per share missed the Zacks Consensus Estimate by 5%. However, the bottom line rose 1.8% year over year.

The company’s total sales of $8,620 million for the first quarter surpassed the Zacks Consensus Estimate by 1.7% and increased 5.3% year over year. Its total backlog was $64.17 billion at the end of first-quarter 2020, compared with $64.84 billion at 2019-end.

Considering the impact of the COVID-19 pandemic, Northrop Grumman lowered its 2020 revenue and earnings guidance (read more: Northrop Grumman Misses on Q1 Earnings, Cuts '20 EPS View).

4.    Textron’s first-quarter 2020 adjusted earnings of 35 cents per share missed the Zacks Consensus Estimate by 23.9%. Its revenues came in at $2,777 million, lagging the Zacks Consensus Estimate by 4% and also declining 10.7% year over year.

As of Apr 4, 2020, cash and cash equivalents totaled $2,263 million compared with $1,181 million as of Jan 4, 2020.

Its long-term debt was $2,956 million as of Apr 4, 2020, compared with $2,563 million as of Jan 4, 2020 (read more:Textron's Q1 Earnings Miss Estimates, Revenues Fall Y/Y).

ADVERTISEMENT

Performance

Over the past five trading sessions, the defense biggies put up a dismal show, except Boeing.  Raytheon Technologies lost the most with 3.7% decline in share price, followed by Northrop Grumman.

Over the last six months as well, the industry's performance has also been disappointing, except Lockheed Martin. This time, Boeing lost the most with 60% slump in share price, followed by Textron.

The following table shows the price movement of the major defense players over the past five trading days and during the last six months.

Company

Past Week

Last 6 Months

LMT

-0.96%

1.13%

BA

3.40%

-59.15%

GD

-1.16%

-28.89%

RTX

-3.66%

-29.79%

NOC

-3.32%

-6.84%

TXT

-3.00%

-44.15%

LHX

-0.21%

-3.83%


What’s Next?

Both Leidos Holdings LDOS and L3Harris Technologies LHX are set to release their first-quarter 2020 numbers on May 5.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

 







Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
The Boeing Company (BA) : Free Stock Analysis Report
 
General Dynamics Corporation (GD) : Free Stock Analysis Report
 
Textron Inc. (TXT) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research