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Defense Stock Roundup: RTX, GD, NOC Beat on Q2 Earnings, BA Misses

·4 min read

In the past five trading sessions, we witnessed Q2 results of some key defense players, which put up a mixed quarterly performance. The overall impact of quarterly results on the bourses remained impressive. The S&P 500 Aerospace & Defense (Industry) index improved 5.8%, while the Dow Jones U.S. Aerospace & Defense index went up 3.6% in the trailing five trading sessions.

In the past week, Raytheon Technologies RTX, The Boeing Company BA, General Dynamics GD, Northrop Grumman NOC and Textron Inc. TXT reported Q2 results.

Recap of Past Week’s Important Stories

1.    Raytheon Technologies’ second-quarter 2022 adjusted earnings per share (EPS) of $1.16 beat the Zacks Consensus Estimate by 3.6%. Moreover, the bottom-line figure improved 13% from the year-ago quarter’s figure.

The company’s second-quarter sales of $16,314 million missed the Zacks Consensus Estimate by 0.8%. The sales figure, however, rose 3% from $15,880 million recorded in the year-ago quarter.

Its free cash flow was $844 million at the end of second-quarter 2022 compared with $1,302 million at the end of second-quarter 2021 (read more: Raytheon Technologies Q2 Earnings Beat, Sales Miss).

2.    Boeing incurred an adjusted loss of 37 cents per share for second-quarter 2022, much wider than the Zacks Consensus Estimate of a loss of 8 cents. The bottom line also deteriorated from the year-ago quarter’s earnings of 40 cents.

The company’s revenues amounted to $16.68 billion, which missed the Zacks Consensus Estimate by 6%. The top line also declined 2% from the year-ago quarter’s figure.

Its backlog at the end of second-quarter 2022 increased to $371.73 billion from $370.84 billion at the end of first-quarter 2022 (read more: Boeing Q2 Earnings Miss Estimates, Revenues Decline Y/Y).

3.    General Dynamics reported second-quarter 2022 EPS of $2.75, which beat the Zacks Consensus Estimate of $2.72 by 1.1%. Quarterly earnings increased 5.4% from $2.61 per share in the year-ago quarter.

The company’s second-quarter revenues of $9,189 million missed the Zacks Consensus Estimate of $9,388 million by 2.1%. Revenues slipped 0.3% from the year-ago quarter.

GD recorded a total backlog of $87.63 billion, up 0.5% from first-quarter 2022 backlog of $87.23 billion. As of Jul 3, 2022, GD generated cash from operating activities of $2,627 million (read more: General Dynamics Q2 Earnings Top, Revenues Fall Y/Y).

4.    Northrop Grumman reported second-quarter 2022 earnings of $6.06 per share, which surpassed the Zacks Consensus Estimate of $6.03 by 0.5%. The bottom line however declined 6% from $6.42 reported in the year-ago quarter.

The company reported total sales of $8.80 billion, which missed the Zacks Consensus Estimate of $9.12 billion by 3.5%. Sales also decreased 4% from the year-ago quarter’s $9.15 billion.

Net cash outflow from operating activities at the end of the second quarter was $685 million against a net cash inflow of $962 million as of Jun 30, 2021 (read more: Northrop Grumman's Q2 Earnings Top, Sales Decline Y/Y).

5.    Textron reported second-quarter 2022 earnings of $1.00 per share, which surpassed the Zacks Consensus Estimate of 88 cents by 13.6%. The bottom line also improved 23.5% from the year-ago quarter’s figure.

Its total revenues came in at $3,154 million, which missed the Zacks Consensus Estimate by 2.4%. The reported figure also decreased 1.2% from the year-ago quarter’s $3,191 million.

As of Jul 2, 2022, cash and cash equivalents totaled $1,764 million compared with $1,922 million as of Jan 1, 2022 (read more: Textron Q2 Earnings Beat Estimates, Revenues Drop Y/Y).

Performance

Over the past five trading sessions, the defense biggies put up a solid show except for Raytheon. Boeing gained the most, with its share price rising 8%.

In the last six months, the industry's performance was also impressive, except for Boeing and Textron. Northrop gained the most with its shares down 19%, followed by L3Harris, which gained 14.8%.

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

6.00%

8.34%

BA

7.94%

-18.85%

GD

3.37%

6.25%

RTX

-1.41%

2.77%

NOC

4.92%

28.35%

TXT

2.27%

-4.52%

LHX

6.50%

14.81%


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