Yahoo Finance Defense Stock Roundup: BAE Systems, Northrop, Lockheed, Boeing, Textron Score Big Wins
With the onset of the Q4 earnings season, we note that the magnitude of negative estimate revisions for the quarter has been lower than the previous quarters. For the aerospace and defense sector, earnings and revenue projections are quite positive. The picture is also relatively better than many other sectors like Energy, Retail/Wholesale, and Auto and Transportation.
Major indices for the Aerospace-Defense industry witnessed positive growth during the last five sessions. The sector benefitted from a generous flow of funds from the Pentagon. While the S&P 500 Aerospace & Defense (Industry) Index gained 0.7%, the Dow Jones U.S. Aerospace & Defense Index inched up 0.6% during this period.
The outlook for this industry improved significantly following Donald Trump’s victory on hopes that the new administration will stick to its campaign promise of ramping up military spending. Although, the plans haven’t been chalked out yet, Aerospace stocks have been scoring big gains since Nov 8.
Among last week’s highlights, defense majors BAE Systems plc BAESY, Northrop Grumman Corp. NOC, Lockheed Martin Corp. LMT, Textron Inc. TXT and Boeing Co. BA secured a number of orders from the Department of Defense’s (“DoD”) daily funding session.
Recap of the Week’s Most Important Stories
1. BAE Systems won a $177.8 million modification contract for the construction and commissioning of a new nitrocellulose facility at the Radford Army Ammunition Plant. The contract was awarded by the Army Contracting Command, Warren, MI.
Work is scheduled to be completed by Dec 31, 2018. The company will execute the work in Radford, VA. It will use fiscal 2015, 2016, and 2017 other funds.
BAE Systems currently has a Zacks Rank #5 (Strong Sell).
2. Northrop Grumman won a $140.0 million modification contract for Battle Field Airborne Communication Node payload, operations and support. The contract was awarded by the Air Force Life Cycle Management Center, Hanscom Air Force Base, MA.
Work is scheduled to be completed by Jan 23, 2018. The company will execute the work in San Diego, CA, and various other locations across the globe. It will use fiscal 2017 overseas contingency operation; and operation and maintenance funds.
Northrop Grumman currently carries a Zacks Rank #2 (Buy).
3. Lockheed Martin’s unit, Rotary and Mission Systems, won a $120.9 million modification contract to procure Technical Insertion 16 Acoustic-Rapid-Commercial-Off-The-Shelf (COTS) Insertion (A-RCI) engineering services and the Integrated Undersea Surveillance System (IUSS). The contract was awarded by the Naval Sea Systems Command, Washington, D.C.
A-RCI is a sonar system that integrates and improves towed array, hull array, sphere array and other ship sensor processing through rapid insertion of COTS-based hardware and software. IUSS provides the Navy with submarine detection, identification and classification services.
Work is scheduled to be completed by Dec 2017. The company will execute the majority of the work in Manassas, VA, and the rest in Clearwater, FL. It will use fiscal 2015 and 2016 shipbuilding conversion (Navy); fiscal 2016 and 2017 other procurement (Navy); and fiscal 2017 research, development, test and evaluation funds.
Lockheed Martin currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4. Bell-Boeing, a strategic joint venture (JV) between aircraft major Boeing and diversified U.S. conglomerate Textron’s wholly owned subsidiary, Bell Helicopter – won a $138.6 million modification contract from the U.S. Navy for the V-22 aircraft. The contract was awarded by the Naval Air Systems Command, Patuxent River, MA.
Per the modification, the JV will procure non-recurring engineering for the development, qualification test, incorporation, airworthiness validation, flight test demonstration, verification and incorporation of the government of Japan configuration into the MV-22B Block C aircraft, and the MV-22 containerized flight training device. Moreover, the JV will procure kits for the Japanese government unique configuration. (Read more: Bell-Boeing Joint Venture Wins $137M Navy Contract for V-22)
Both Boeing and Textron carry a Zacks Rank #3 (Hold).
Performance
The major defense stocks put up a strong performance over the past five trading sessions. L3 Technologies, Inc. LLL was the biggest gainer, with the stock improving 7.01%, followed by Raytheon Co. RTN.
Over the past six months too, all the industry majors in this sector delivered a stellar performance. Notably, Textron gained the most with its stock rallying 25.85%, followed by General Dynamics.
The following table shows the price movement of the major defense players over the past five trading days and the last six months.
What’s Next in the Defense Sector?
Lockheed is set to release fourth-quarter 2016 financial results before the market opens on Jan 24.
Boeing, Textron, and United Technologies Corporation UTX will announce their fourth-quarter 2016 numbers on Jan 25, before the opening bell.
Northrop Grumman, Raytheon and L3 Technologies are all scheduled to report fourth-quarter earnings on Jan 26, before the market opens.
Honeywell International Inc. HON and General Dynamics will report their fourth-quarter 2016 results on Jan 27.
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Northrop Grumman Corp. (NOC): Free Stock Analysis Report
Boeing Co. (BA): Free Stock Analysis Report
Lockheed Martin Corp. (LMT): Free Stock Analysis Report
Bae Systems PLC (BAESY): Free Stock Analysis Report
Textron Inc. (TXT): Free Stock Analysis Report
Honeywell International Inc. (HON): Free Stock Analysis Report
United Technologies Corp. (UTX): Free Stock Analysis Report
Raytheon Co. (RTN): Free Stock Analysis Report
L-3 Communications Holdings Inc. (LLL): Free Stock Analysis Report
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