Defense Stock Roundup: LMT, RTX, BA, GD, TDY Beat on Q2 Earnings

A handful of major defense contractors released their Q2 results in the past five trading sessions, which came in better than expected for most of the stocks. Share performance at the bourses also remained strong buoyed by investors’ optimism following the stellar economic growth data released by the U.S. Commerce Department. The U.S. stock market as a whole also performed well with bigwigs like Apple and Facebook posting encouraging results.

Consequently, major defense stock indices ended in the green in the trailing five trading sessions. The S&P 500 Aerospace & Defense (Industry) index inched up 1.7%, while the Dow Jones U.S. Aerospace & Defense index rose 2% in the aforementioned time period.

In the past week, prominent defense players Lockheed Martin LMT, Raytheon Technologies (RTX), Boeing BA, General Dynamics GD, Teledyne Technologies TDY, Textron TXT and Northrop Grumman NOC reported their Q2 results.

Recap of Past Week’s Important Stories

1.    Lockheed’s second-quarter 2021 adjusted earnings of $7.13 per share surpassed the Zacks Consensus Estimate by 9.5% and also improved 16.3% from the year-ago quarter’s reported figure. Its net sales amounted to $17,029 million, which outshined the Zacks Consensus Estimate by 0.5% and also increased 5% year over year.

The company ended the second quarter (on Jun 27, 2021) with $141.7 billion in backlog compared with $147.1 billion at the end of 2020.

Lockheed’s 2021 earnings per share are currently anticipated to be in the $26.70-$27.00 range for 2021 compared with $26.40-$26.70 projected earlier (read more: Lockheed Martin Q2 Earnings Beat Estimates, Sales Up Y/Y).

2.    Raytheon Technologies’ second-quarter 2021 adjusted earnings per share (EPS) of $1.23 outpaced the Zacks Consensus Estimate by 33.7% and improved 164% from the year-ago quarter’s reported figure. Its second-quarter sales of $15,880 million beat the Zacks Consensus Estimate by 0.4% and also increased 12.9% year over year.

Raytheon Technologies had cash and cash equivalents of $8,051 million as of Jun 30, 2021, compared with $8,802 million as of Dec 31, 2020.

The company currently expects to record revenues in the band of $64.4-$65.4 billion, compared with the prior guidance of $63.9-$65.4 billion (read more: Raytheon Technologies Beats on Q2 Earnings, Ups EPS View).

3.    Boeing reported adjusted earnings of 40 cents per share for second-quarter 2021 in contrast to the Zacks Consensus Estimate of a loss of 65 cents. The bottom line also improved significantly from the year-ago quarter’s loss. Its revenues amounted to $16,998 million, which missed the Zacks Consensus Estimate by 0.2% but improved 44% from the year-ago quarter’s figure.

Backlog at the end of second-quarter 2021 was $363.5 billion, slightly down from $364 billion at the end of first-quarter 2021.

Boeing’s operating cash outflow at the end of second-quarter 2021 was $3.87 billion compared with $9.59 billion at the end of second-quarter 2020 (read more: Boeing's Q2 Earnings Beat Estimates, Revenues Rise Y/Y).

4.    General Dynamics’ second-quarter 2021 earnings from continuing operations of $2.61 per share beat the Zacks Consensus Estimate by 3.6% and improved 7% year over year. Its revenues of $9,220 million missed the Zacks Consensus Estimate by 0.1% and also declined 0.5% from the year-ago quarter.

General Dynamics recorded a total backlog of $89.2 billion, up 7.9% year over year. Funded backlog at the quarter-end was $41.1 billion.

At the end of the first half of 2021, the company generated cash from operating activities of $1,118 million compared with $177 million generated in the year-ago period (read more: General Dynamics' Q2 Earnings Beat, Revenues Miss Estimates).

5.    Teledyne Technologies’ second-quarter 2021 adjusted earnings of $4.61 per share surpassed the Zacks Consensus Estimate by 56.8% and also improved 72% from the year-ago quarter’s figure. Its total sales amounted to $1,121 million, which exceeded the Zacks Consensus Estimate by 11.7% and also improved 50.8% year over year.

Teledyne’s cash and cash equivalents totaled $695.1 million as of Jul 4, 2021, compared with $673.1 million at the end of 2020.

For 2021, the company now expects to generate adjusted earnings per share in the range of $15.25-$15.50, higher than the prior guided range of $12.00-$12.20 (read more: Teledyne Technologies Q2 Earnings Top, 2021 EPS View Up).

6.    Textron’s second-quarter 2021 adjusted earnings of 81 cents per share exceeded the Zacks Consensus Estimate by 32.8% and also improved significantly from 13 cents recorded in the year-ago quarter. Its total revenues worth $3,191 million beat the Zacks Consensus Estimate by 9.4% and also improved a solid 29.1% year over year.

The company’s cash flow from operating activities amounted to $679 million at the end of the second quarter against cash outflow of $148 million at the end of the prior-year period.

Textron currently expects to generate adjusted earnings per share from continuing operations in the range of $3.00 to $3.20, indicating an increase from the prior guidance range $2.80-$3.00 (read more: Textron Beats on Q2 Earnings, Raises 2021 EPS View).

7. Northrop Grumman’s second-quarter 2021 earnings of $6.42 per share surpassed the Zacks Consensus Estimate by 11.7% and also increased 6.8% from the year-ago quarter. Its total sales of $9,151 million surpassed the Zacks Consensus Estimate by 5.1% and increased 3% from the year-ago quarter.

Its total backlog stood at $76.6 billion at the end of second-quarter 2021 compared with $81 billion at 2020-end. Of the total backlog, $33.1 billion was funded.

Northrop Grumman’s cash and cash equivalents as of Jun 30, 2021 was $3,941 million, down from $4,907 million as of Dec 31, 2020 (read more: Northrop Grumman Beats on Q2 Earnings, Ups 2021 View).

Performance

Over the past five trading sessions, the defense biggies put up a solid show, except Lockheed. Boeing gained the highest, with its shares up 4.9%, followed by General Dynamics.

In the last six months, the industry's performance was impressive. Textron gained the most with its shares up 53.1%, followed by General Dynamics, which rallied 35.1%.

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	-0.73%	15.78%
BA	4.87%	19.28%
GD	3.97%	35.08%
RTX	2.13%	30.68%
NOC	1.78%	27.58%
TXT	1.66%	53.09%
LHX	1.07%	32.98%

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