Aerospace & Defense Stock Q2 Earnings on Jul 26: BA, GD & More
The second-quarter 2023 reporting cycle has started for aerospace and defense stocks, with Lockheed Martin reporting better-than-expected earnings and sales. Some major industry players like Boeing BA, General Dynamics GD, Teledyne Technologies TDY and L3Harris Technologies LHX are set to report their results tomorrow.
Factors That Influenced Aerospace & Defense Stocks
Per a recent report by the International Air Transport Association, industry-wide global revenue per kilometer increased 39.1% year over year in May 2023. This is indicative of the steadily growing air passenger traffic across the globe, which in turn is likely to significantly boost the second-quarter results of aerospace and defense stocks, particularly those engaged in commercial aviation.
Evidently, Boeing witnessed a solid year-over-year surge of 12.4% in its commercial shipments during the quarter to be reported. With BA being the nation’s largest jet maker, we expect the April-June quarter results of the remaining aerospace majors to reflect a similar improvement in delivery trends. Such solid deliveries might have boosted the overall top as well as bottom-line growth of the Aerospace sector, which houses all aerospace and defense stocks.
Stocks that are more focused on combat are also expected to have gained as a result of consistent government support. Notably, a steady order flow observed in the past couple of quarters, along with improving delivery trend in recent times, buoyed by recovering economic trends, is likely to have bolstered the aerospace and defense stocks’ second-quarter revenues.
However, persistent headwinds like supply-chain disruption, inflationary pressure along with rising jet fuel prices as well as increasing policy rates by the Federal Reserve might have adversely impacted the industry’s bottom-line performance.
Q2 Projections
The Aerospace sector’s earnings are expected to decline 9% from the prior-year quarter’s reported figure. Revenues are projected to improve 7.2%.
For more details on quarterly releases, you can go through the latest Earnings Preview.
Aerospace & Defense Stocks to Watch
Let's take a look at four defense companies that are scheduled to report second-quarter 2023 earnings on Jul 26 and find out how things might have shaped up prior to the announcements.
Boeing’s second-quarter deliveries reflected a solid year-over-year surge of 12.4% in commercial shipments, while defense deliveries went down 5%. Improvement in the company’s commercial shipment is likely to have outweighed the decline in defense shipment, thereby aiding BA’s overall top-line performance.
Higher jet deliveries, especially that of 737 aircraft in the past couple of quarters, along with the recent strong order activity and increased aftermarket services, are expected to have contributed to Boeing’s second-quarter cash flow reserve. However, expected abnormal costs in relation to the 787 program, along with periodic expenses, might have had an adverse impact on its bottom line. (read more: Will 787 Abnormal Costs Impact Boeing's Q2 Earnings?).
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Boeing currently has an Earnings ESP of -2.87% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Boeing Company Price and EPS Surprise
The Boeing Company price-eps-surprise | The Boeing Company Quote
General Dynamics’ second-quarter results are expected to reflect strong revenue performance across most of its business segments. Increased global air travel demand boosting aircraft services is likely to have bolstered its Aerospace business unit’s sales performance. However, the supply-chain constraints of the Virginia program are likely to dent Marine Systems segment’s second-quarter results.
Strong order activity in IT services and higher hardware volumes are likely to have contributed to the Technologies unit’s revenues. However, foreign exchange rate fluctuations and supply-chain disruptions might have impacted General Dynamics’ bottom line in the soon-to-be-reported quarter.
General Dynamics currently has an Earnings ESP of -2.13% and a Zacks Rank #4 (Sell) (read more: Will Supply-Chain Issue Hurt General Dynamics' Q2 Earnings?).
General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation price-eps-surprise | General Dynamics Corporation Quote
Teledyne’s second-quarter results are likely to reflect solid segmental performance from the majority of its business units. Higher sales of industrial and scientific vision systems and low-dose high-resolution digital X-ray detectors are likely to have added impetus to the Digital Imaging segment’s revenues.
Increased sales of electronic test and measurement instrumentation, marine and environmental instrumentation are expected to have aided the Instrumentation segment’s revenues. Higher sales of energy systems and engineered products might have benefited Engineered Systems’ revenues.
A modest improvement in supply-chain constraints is expected to have favorably contributed to TDY’s earnings in the quarter under review.
Teledyne currently has an Earnings ESP of 0.00% and a Zacks Rank #2 (read more: Will Segmental Sales Aid Teledyne's Earnings in Q2?). You can see the complete list of today’s Zacks #1 Rank stocks here.
Teledyne Technologies Incorporated Price and EPS Surprise
Teledyne Technologies Incorporated price-eps-surprise | Teledyne Technologies Incorporated Quote
L3Harris Technologies’ second-quarter results are expected to reflect strong revenue performance across most of its business segments. Higher revenues from Space Systems and an increase in production from Mission Avionics business are likely to have added an impetus to Space and Airborne Systems unit’s revenues in the second quarter.
Higher revenues from Broadband Communications, principally driven by the TDL acquisition, as well as higher volume from Tactical Communications are expected to have boosted Communication Systems’ top-line performance. However, lower classified and service revenues from maritime business are likely to have hurt Integrated Mission Systems segment’s revenues in the second quarter.
Inflation-induced higher input costs and inflated interest expenses caused by increased interest rates might have had an adverse impact on LHX’s earnings.
L3Harris currently has an Earnings ESP of +0.85% and a Zacks Rank #3 (read more: Will Higher Interest Costs Hurt L3Harris in Q2 Earnings?)
L3Harris Technologies Inc Price and EPS Surprise
L3Harris Technologies Inc price-eps-surprise | L3Harris Technologies Inc Quote
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L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
