Australia markets open in 4 hours 53 minutes

Defense Stock Roundup: LDOS, HII Miss on Q1 Earnings, LHX, RTX Beat

Zacks Equity Research

A handful of defense majors released their Q1 numbers this past week. Following their mixed performances, the major indices of the Aerospace-Defense space ended in the green over the trailing five trading sessions. Evidently, the S&P 500 Aerospace & Defense (Industry) index inched up 0.6%, while the Dow Jones U.S. Aerospace & Defense index rose 0.5% in the aforementioned time period.

In the past week, quarterly results from a number of Aerospace-Defense majors namely, Ledios Holdings LDOS, L3Harris Technologies LHX, Raytheon Technologies RTX, FLIR Systems FLIR, Transdigm Group TDG, Huntington Ingalls Industries HII and Spirit AeroSystems SPR drew investors’ attention.

Recap of Past Week’s Important Stories

1.    Leidos Holdings reported first-quarter 2020 adjusted earnings of $1.19 per share, which missed the Zacks Consensus Estimate by 4% but grew 5.3% year over year. Its total revenues of $2,889 million exceeded the Zacks Consensus Estimate by a whisker and also improved 12.1% year over year.

At the end of the reported quarter, the company’s total backlog was $28.3 billion compared with $24.1 billion at 2019-end.

Its net cash provided by operating activities in the first quarter of 2020 was $372 million compared with $288 million a year ago. Leidos Holdings revised its outlook for 2020 (read more: Leidos Holdings Q1 Earnings Miss, Revenues Rise Y/Y).

2.    L3Harris Technologies reported first-quarter 2020 adjusted earnings of $2.80 per share, which surpassed the Zacks Consensus Estimate by 7.3% and increased 20.7% year over year. The company’s revenues of $4,626 million exceeded the Zacks Consensus Estimate by 0.8% and surged 168% on a year-over-year basis.

As of Apr 3, 2020, L3Harris had $663 million in cash and cash equivalents compared with $824 million as of Jan 3, 2020.

Considering the impacts of the COVID-19 pandemic, L3Harris made some changes to its 2020 guidance (read more: L3Harris Technologies Q1 Earnings Beat, EPS View Cut).

3.    Raytheon Technologies’ first-quarter 2020 results included standalone United Technologies along with Otis and Carrier. The company’s adjusted earnings per share (EPS) of $1.78 outpaced the Zacks Consensus Estimate by 60.4% but declined 6.8% from the year-ago quarter.

The company’s quarterly sales of $18,210 million inched down 0.8% on a year-over-year basis, while exceeding the Zacks Consensus Estimate by a whisker.

Raytheon Technologies ended Mar 31, 2020 with cash and cash equivalents of $8,001 million, up from $7,378 million as of Dec 31, 2019.

4.    FLIR Systems reported first-quarter 2020 adjusted earnings of 42 cents per share, which came in line with the Zacks Consensus Estimate but declined 20.8% year over year. Its revenues inched up 1.4% year over year and beat the Zacks Consensus Estimate by 2.7%.

The company’s cash flow from operating activities in the first quarter of 2020 amounted to $50.9 million compared with the prior-year quarter’s $55.5 million.

FLIR Systems withdrew its previously-issued guidance for 2020 due to the uncertainties concerning the COVID-19 pandemic (read more:FLIR Systems' Q1 Earnings Match Estimates, Down Y/Y).

5.    TransDigm Group’s second-quarter fiscal 2020 adjusted earnings of $5.10 per share surpassed the Zacks Consensus Estimate by 33.1% and increased 22.6% year over year. Its net sales of $1,443 million grew 23.5% year over year and also outpaced the Zacks Consensus Estimate by 1%.

Its cash from operating activities amounted to $594 million, as of Mar 28, 2020, compared with $453 million, as of Mar 30, 2019.

On Apr 2, 2020, the company withdrew its previously-provided financial guidance for the fiscal year ending Sep 30, 2020 (read more: TransDigm Q2 Earnings Beat Estimates, Sales Up Y/Y).

6.    Huntington Ingalls Industries’ first-quarter 2020 earnings of $4.23 per share missed the Zacks Consensus Estimate by 5.4% but surged 48.4% year over year. Its revenues of $2.26 billion exceeded the Zacks Consensus Estimate by 7.1% and rose 8.8% year over year.

Huntington Ingalls received orders worth $900 million in the first quarter.

Its cash from operating activities, at the end of the first quarter of 2020, grossed $68 million compared with $11 million at the end of first-quarter 2019 (read more: Huntington Ingalls Q1 Earnings Miss Estimates, Up Y/Y).

7.    Spirit AeroSystems’ first-quarter 2020 adjusted loss of 79 cents per share was narrower than the Zacks Consensus Estimate but deteriorated from the year-ago quarter’s earnings of $1.68.

Total revenues of $1,077 million exceeded the Zacks Consensus Estimate by 10.7% but declined a staggering 45% on a year-over-year basis.

The company’s backlog at the end of first-quarter 2020 was $42 billion compared with $43 million at the end of 2019 (read more: Spirit AeroSystems Q1 Earnings Beat, Revenues Fall Y/Y).

Performance

Over the past five trading sessions, the defense biggies put up a mixed show. While General Dynamics gained the most, with its share price rising 5.9%, L3Harris lost the most, with 4.5% decline.

Over the last six months, the industry's performance was disappointing. Boeing lost the most with 63.4% 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 -0.65% -0.91%
BA 0.05% -63.35%
GD 5.91% -26.87%
RTX -3.99% -39.15%
NOC -0.12% -6.42%
TXT 4.12% -44.90%
LHX -4.49% -7.69%


More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


 

 






 


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
 
FLIR Systems Inc (FLIR) : Free Stock Analysis Report
 
Transdigm Group Incorporated (TDG) : Free Stock Analysis Report
 
Spirit Aerosystems Holdings Inc (SPR) : Free Stock Analysis Report
 
Huntington Ingalls Industries Inc (HII) : Free Stock Analysis Report
 
Leidos Holdings Inc (LDOS) : Free Stock Analysis Report
 
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
 
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research