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Defense Stock Roundup: BA, NOC, RTN Beat Earnings Estimates, GD & HRS Report In Line

The Q2 earnings season has passed the halfway mark, with more than 57.2% of S&P 500 companies having released their quarterly results. As of Jul 28, of the 286 S&P 500 members which revealed their earnings numbers, 74.5% came up with an earnings beating figure, while 69.2% surpassed revenue estimates.

Coming to the broader Aerospace sector’s performance, 90% of the defense stocks released earnings as of Jul 28, with an earnings beat ratio of 88.9% and sales beat ratio of 87.1%.

Obviously, impressive earnings release news primarily got reflected in the defense stock’s performance over the last five trading sessions. Evidently, major indices of the Aerospace-Defense space – the S&P 500 Aerospace & Defense (Industry) Index rose 1.7%, while the Dow Jones U.S. Aerospace & Defense Index grew 1.5% – during this period.

Among last week’s highlights, defense primes, The Boeing Co. BA, Northrop Grumman Corp. NOC, General Dynamics Corp. GD, Raytheon Co. RTN, L3 Technologies, Inc. LLL, Rockwell Collins Inc. COL and Harris Corp. HRS have released their quarterly figures.

(Read Defense Stock Roundup for Jul 26, 2017 here)

Recap of Last Week’s Key Stories

1. Boeing reported second-quarter 2017 adjusted earnings per share, which beat the Zacks Consensus Estimate by 9.9%. However, the company's revenues missed estimates by 1.2%.

Backlog at the end of the second quarter grew to $482.2 billion. Boeing generated 57.8% higher operating cash flow in the reported quarter.

For 2017, Boeing projects adjusted or core earnings per share in the range of $9.80–$10.00, up from the previous guided range of $9.20–$9.40 (read more: Boeing Beats on Q2 Earnings, Raises '17 EPS Guidance).

2. Northrop Grumman’s second-quarter 2017 earnings and revenues surpassed the Zacks Consensus Estimate by 10.9% and 2.7%, respectively.

The company’s cash and cash equivalents as of Jun 30, 2017 were $1.38 billion, down from the 2016-end figure. Net cash outflow from operating activities was million compared with the year-ago figure of $544 million.

Northrop Grumman currently expects to generate revenues lower than $25 billion during 2017 compared with its earlier guidance of approximately $25 billion (read more: Northrop Grumman Tops on Q2 Earnings, Ups' 17 EPS View).

3. General Dynamics’ second-quarter 2017 earnings from continuing operations came in line with the Zacks Consensus Estimate, while total revenue missed estimates by 1.7%.

The company recorded a total backlog of $58.6 billion, down 10% year over year. Free cash flow from operations at the end of the second quarter was $386 million, up year over year.

In terms of outlook, General Dynamics increased its EPS guidance for 2017 from the range of $9.50–$9.55 to $9.70–$9.75 (read more: General Dynamics Q2 Earnings In Line, '17 View Raised).

4. Raytheon’s second-quarter 2017 adjusted earnings from continuing operations and revenues exceeded the Zacks Consensus Estimate by 13.8% and 0.9%, respectively.

Raytheon’s bookings in the second quarter were $6,532 million, down 8% year over year. Operating cash flow from continuing operations was $741 million in the quarter compared with $1,071 million in the year-ago quarter.

Raytheon has raised its top- and bottom-line full-year guidance (read more: Raytheon Tops Q2 Earnings & Sales, Raises '17 View).

5. L3 Technologies’ second-quarter 2017 earnings per share from continuing operations and revenues beat the Zacks Consensus Estimate by 8.9% and 1.1%, respectively.

Net cash from operating activities was $351 million at the end of the quarter, down 6.6% from the year-ago figure. L3 Technologies has raised its 2017 outlook again on both the top- and bottom-line fronts (read more: L3 Technologies Beats Q2 Earnings, Updates '17 View).

6. Rockwell Collins reported financial results for third-quarter fiscal 2017 (ended Jun 30, 2017). Its adjusted earnings per share surpassed the Zacks Consensus Estimate by 3.8%. The company’s total sales also exceeded estimates by 3.4%.

Cash used for operating activities in the first nine months of fiscal 2017 was $416 million, compared with $223 million a year ago. The company reiterated its 2017 guidance (read more: Rockwell Collins Tops on Q3 Earnings, Updates '17 View).

7. Harris Corporation reported fourth-quarter fiscal 2017 earnings (on an adjusted basis) per share, which came in line with the Zacks Consensus Estimate while revenues beat the same.

At the end of fiscal 2017, the company had cash and cash equivalents of $484 million, compared with $487 million at the end of fiscal 2016. Harris Corp now expects earnings per share (on an adjusted basis) for fiscal 2018 in the band of $5.85–$6.05 (read more: Harris Meets Q4 Earnings Estimates, Issues '18 View).


Over the last five trading sessions, defense biggies have put up a mixed show. While shares of L3 Technologies, General Dynamics and Textron Inc. TXT witnessed a downfall, others like Northrop, Lockheed Martin Corp. LMT gained considerably.

However, over the last six months, the performance of the entire industry has been quite stellar. Boeing gained the most, with its shares rising 46.03%, followed by Rockwell Collins.

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

CompanyLast WeekLast 6 Months

What’s Up Next in this Space?

HuntingtonIngalls Industries, Inc. HII and Orbital ATK, Inc. OA are scheduled to report their second-quarter 2017 results on Aug 3.

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Harris Corporation (HRS): Free Stock Analysis Report
Northrop Grumman Corporation (NOC): Free Stock Analysis Report
Boeing Company (The) (BA): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report
Rockwell Collins, Inc. (COL): Free Stock Analysis Report
Orbital ATK, Inc. (OA): Free Stock Analysis Report
Textron Inc. (TXT): Free Stock Analysis Report
Raytheon Company (RTN): Free Stock Analysis Report
L-3 Communications Holdings, Inc. (LLL): Free Stock Analysis Report
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