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

Zacks Equity Research
·5-min read

Given modest Q2 numbers, the major indices of the Aerospace-Defense space did not perform well over the trailing five trading sessions. Notably, both the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense indices dipped 1.1% in the aforementioned time period.

In the past week, quarterly results from a number of Aerospace-Defense majors namely,  Raytheon Technologies RTX, 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.    Raytheon Technologies’ second-quarter 2020 adjusted earnings per share (EPS) of 40 cents outpaced the Zacks Consensus Estimate by 300%but declined 67.7% from the year-ago quarter figure.

The company’s second-quarter sales of $14,061 million declined 24.1% on a year-over-year basis. The top line, however, beat the Zacks Consensus Estimate by 0.6%.

Raytheon Technologies ended Jun 30, 2020 with cash and cash equivalents of $6,975 million, up from $4,937 million as of Dec 31, 2019 (read more: Raytheon Technologies Q2 Earnings Beat, Sales Fall Y/Y).

2.    Boeing incurred adjusted loss of $4.79 per share for second-quarter 2020, wider than the Zacks Consensus Estimate. However, the bottom line improved from the year-ago quarter’s loss.

Its revenues amounted to $11.81 billion, which missed the Zacks Consensus Estimate by 6.3% and declined 25% from the year-ago quarter’s figure.

Boeing exited the second quarter with cash and cash equivalents of $20 billion, compared with$7.64 billion at the end of 2019 (read more: Boeing Q2 Earnings Miss Estimates, Sales Decline Y/Y).

3.    General Dynamics’ second-quarter 2020 earnings from continuing operations of $2.18 per share beat the Zacks Consensus Estimate by 1.89% but plunged 21.3% from the year-ago quarter.

Second-quarter revenues of $9,264 million surpassed the Zacks Consensus Estimate by 1.7%. However, revenues declined 3% from the year-ago quarter.

As of Jun 28, 2020, General Dynamics’ cash and cash equivalents were $2,300 million compared with $902 million on Dec 31, 2019 (read more: General Dynamics' Q2 Earnings Beat, Backlog Up Y/Y).

4.    Northrop Grumman’s second-quarter 2020 earnings of $6.01 per share surpassed the Zacks Consensus Estimate by 12.1% and increased 19% from the year-ago quarter.

Its total sales of $8,884 million surpassed the Zacks Consensus Estimate by 3.4% and increased 5% from the year-ago quarter’s figure.

Northrop Grumman’s cash and cash equivalents as of Jun 30, 2020 were $4,178 million, up from $2,245 million as of Dec 31, 2019 (read more: Northrop Grumman Beats on Q2 Earnings, Ups '20 View).

5.    Textron reported second-quarter 2020 adjusted earnings of 13 cents per share against the Zacks Consensus Estimate of a loss of 15 cents. Its total revenues came in at $2,472 million, which surpassed the Zacks Consensus Estimate by 5.1% but decreased 23.5% from the year-ago quarter figure.

As of Jul 4, 2020, Textron’s cash and cash equivalents totaled $2,176 million compared with $1,181 million as of Jan 4, 2020.

Cash outflow from operating activities amounted to $148 million at the end of the second quarter compared with cash outflow of $33 million at the end of the prior-year period (read more: Textron Q2 Earnings Beat Estimates, Revenues Fall Y/Y).

Performance

Over the past five trading sessions, the defense biggies put up a dismal show, except Northrop.  Raytheon Technologies lost the most with 6.3% decline in share price.

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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 almost 50% slump in share price.

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

-8.00%

-48.65%

GD

-1.16%

-28.89%

RTX

-6.30%

-29.79%

NOC

5.74%

-6.84%

TXT

-3.00%

-44.15%

LHX

-0.21%

-3.83%

What’s Next?

Leidos Holdings LDOS is set to release its second-quarter 2020 numbers on Aug 4, while Huntington Ingalls Industries HII is scheduled to report its quarterly results on Aug 6.

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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
 
Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
 
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