U.S. Markets close in 1 hr 54 mins

Defense Stock Roundup: Impressive Q2 Picture, LMT, BA, GD, NOC Earnings Beat

Zacks Equity Research
The Zacks Aerospace sector has seen earnings improve 25.4% year over year on 8.6% sales growth in the current reporting cycle, as of Jul 25.

With 147 S&P 500 companies having already reported results, the Q2 earnings season is in full swing. As of Jul 25, earnings of these members increased 23.3% year over year on 9.1% higher revenues. For the S&P 500 index as a whole, total Q2 earnings are expected to grow 22.3% from last year’s second quarter, on 8.4% revenue growth.

The Zacks Aerospace sector has seen earnings improve 25.4% year over year on 8.6% sales growth in the current reporting cycle, as of Jul 25.

Such impressive numbers have boosted the defense stocks over the trailing five trading sessions. Consequently, the major indices of the Aerospace-Defense space, the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense index, inched up 0.6% in the trailing five trading sessions.

Nevertheless, quarterly results from a number of Aerospace-Defense majors, namely Textron, Inc. TXT, Lockheed Martin Corp. LMT, The Boeing Company BA, United Technologies, Corp. UTX, General Dynamics Corp. GD, Northrop Grumman Corp. NOC and Honeywell International Inc. HON remained a key area of investors focus.

Recap of Past Week’s Important Stories

1. Textron reported second-quarter earnings from continuing operations of 87 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 24.3%. Total revenues came in at $3,726 million, outpacing the Zacks Consensus Estimate of $3,585 million by 3.9%.

As of Jun 30, 2018, the company’s cash and cash equivalents totaled $554 million compared with $1,079 million as of Dec 31, 2017. Capital expenditures amounted to $82 million compared with $85 million in the prior-year quarter.

Also, Textron raised its guidance for 2018 (read more: Textron Tops Q2 Earnings Estimates, Lifts '18 EPS View).

2. Lockheed Martin’s second-quarter adjusted earnings of $4.31 per share exceeded the Zacks Consensus Estimate of $3.89 by 10.8%. In the reported quarter, total revenues summed $13.40 billion, which surpassed the Zacks Consensus Estimate of $12.75 billion by 5.1%.

Lockheed Martin ended the second quarter (on Jun 24, 2018) with $105 billion in backlog, up a mere 0.2% from $104.8 billion at the end of first-quarter 2018.

For 2018, Lockheed Martin raised its financial outlook. During the second quarter, the company repurchased 1 million shares for $310 million (read more: Lockheed Martin Beats on Q2 Earnings, Raises 18' View).

3. Boeing’s adjusted earnings came in at $3.33 per share for second-quarter 2018, beating the Zacks Consensus Estimate of $3.24 by 2.8%.The company's revenues amounted to $24.26 billion in the quarter, surpassing the Zacks Consensus Estimate of $23.98 billion by 1.2%.

Backlog at the end of the second quarter was up $488 billion from $486.2 billion at the end of the last reported quarter.

Boeing exited the second quarter with cash and cash equivalents of $8.12 billion and short-term and other investments of $1.65 billion. The company lifted its 2018 revenue guidance as well (read more: Boeing Beats on Earnings in Q2, Hikes '18 Sales View).

4. United Technologies’ second-quarter earnings of $1.97 per share surpassed the Zacks Consensus Estimate of $1.85 per share. The company posted revenues of $16.71 billion, which came well ahead of the Zacks Consensus Estimate by 2.71%.

Exiting the quarter, United Technologies had cash and cash equivalents of $11,068 million, up from $8,985 million recorded as of Dec 21, 2017.

The company upped its 2018 earnings view to $7.10-$7.25 per share from $6.95-$7.15 projected earlier (read more: United Technologies Q2 Earnings Top, '18 EPS View Up).

5. General Dynamics reported second-quarter 2018 adjusted earnings from of $2.82 per share, which exceeded the Zacks Consensus Estimate of $2.49 by 13.3%. Total revenues came in at $9,186 million outpacing the Zacks Consensus Estimate of $9,108 million by 0.9%.

As of Jul 1, 2018, General Dynamics’ cash and cash equivalents were $1,862 million compared with $2,983 million as of Dec 31, 2017.

Free cash flow from operations at the end of the second quarter was $612 million compared with $386 million in the previous year’s second quarter (read more: General Dynamics Q2 Earnings Top Estimates, Sales Up Y/Y).

6. Northrop Grumman’s second-quarter 2018 earnings of $3.93 per share topped the Zacks Consensus Estimate of $3.83 by 2.6%. The company reported total revenues of $7.12 billion, which surpassed the Zacks Consensus Estimate of $7 billion by 1.7%.

Northrop Grumman’s cash and cash equivalents as of Jun 30, 2018, were $1.54 billion, down from $11.22 billion as of Dec 31, 2017.

On the bottom-line front, the company has raised its 2018 outlook. Northrop Grumman now expects to generate earnings in the range of $16.60-$16.85 per share (read more: Northrop Grumman Q2 Earnings Beat, ‘18 EPS View Up).

7. Honeywell International’s adjusted earnings in the second quarter came in at $2.12 per share, outpacing the Zacks Consensus Estimate of $2.01.Revenues of $10,919 million exceeded the Zacks Consensus Estimate of $10,776 million. 

Exiting the quarter, Honeywell had cash and cash equivalents of $8,082 million, higher than $7,059 million recorded as of Dec 31, 2017.

For 2018, the company envisions earnings to be in the band of $8.05-$8.15 per share, higher than the previous projection of $7.85-$8.05 per share (read more: Honeywell Tops Q2 Earrings on Operational Excellence).

Performance

Over the last five trading sessions, the defense biggies put up a mixed show. While Northrop Grumman lost the most with 8.9% share price decline, General Dynamics’ shares have gained 3.2% in this period.

The industry's performance over the last six months has also been a mixed bag. Textron gained the most, with its shares rallying 11.6%, followed by Boeing.

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 Last Week Last 6 Months
LMT 1.05% -6.37%
BA 1.12% 4.69%
GD 3.15% -11.39%
RTN -4.44% -7.89%
NOC -8.90% -11.99%
COL 1.36% -0.80%
TXT 1.56% 11.62%
LLL 1.42% -4.88%


  • What happens if you win Mega Millions' $970M jackpot?
    News
    Associated Press

    What happens if you win Mega Millions' $970M jackpot?

    Despite the terrible odds — one in 302.5 million for those keeping score at home — someone will eventually match all six numbers and win the Mega Millions jackpot, which now stands at $970 million. Here are some answers for someone holding that prized lottery ticket for what would be the second-largest lottery jackpot in U.S. history. Lottery officials recommend winners take a deep breath, put their winning ticket in a safe spot and consult with a reputable financial planner before popping over to the lottery headquarters.

  • Here's everyone who has dropped out of Saudi Arabia's 'Davos of the Middle East'
    Finance
    Yahoo Finance

    Here's everyone who has dropped out of Saudi Arabia's 'Davos of the Middle East'

    U.S. Treasury Secretary Steven Mnuchin tweeted Thursday that he will not be attending the Future Investment Initiative in Saudi Arabia next week. The news comes after prominent members of the world’s business community have been dropping out of Saudi

  • Finding a Cure for Kinder Morgan’s Frustration
    Business
    Bloomberg

    Finding a Cure for Kinder Morgan’s Frustration

    Rising profits – Ebitda was up 6 percent, year over year – and that Canadian pipeline sale have helped address Kinder Morgan’s biggest problem, its crushing debt. Thankfully, it provided a strong signal on Wednesday evening that it would.

  • Cramer's lightning round: For growth and yield, go with V...
    KHC
    CNBC Videos

    Cramer's lightning round: For growth and yield, go with V...

    Jim Cramer speeds through his take on callers' favorite stocks, including his favorite pick for "decent growth with good yield."

  • The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs
    News
    MarketWatch

    The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs

    When the media and investors turn negative on stocks but the “smart money” is bullish, it’s a good time to think about buying. After all, exactly what is the smart money, and how do you know? Lately, several fund managers who pass this test have been pounding the table on Chinese internet names.

  • Business
    CNBC

    Goldman Sachs sees a correction coming for chipmakers but still likes Nvidia

    "We foresee a cyclical correction approaching and recommend investors to stay selective in Semis," Goldman Sachs said in a note Thursday. Nvidia is Goldman's top choice in the industry. Goldman Sachs warned clients about a downturn coming for the semiconductor sector, but still recommends some chip stocks.

  • Provocateur Stormy Daniels Takes an Unexpected Turn in the National Spotlight
    Politics
    Time

    Provocateur Stormy Daniels Takes an Unexpected Turn in the National Spotlight

    To understand what it means to be famous like Stormy Daniels, for the reasons she is famous, spend time with her in a public space. On Oct. 15, a California judge threw out the defamation case she filed against Donald Trump. Over the past year, Daniels, 39, has become the Zelig of White House scandals.

  • LCOR plans more multifamily in Crystal City
    Finance
    American City Business Journals

    LCOR plans more multifamily in Crystal City

    LCOR Inc. hopes to submit plans to Arlington County next month to develop a multifamily-over-retail project on part of the Verizon site in Crystal City after quietly acquiring the nearly 40,000-square-foot property over the summer. The suburban Philadelphia based developer wants to build around 280 units and up to 20,000 square feet of retail on what is now a surface lot at 400 11th St. S, excluding the Verizon switchgear facility that will remain. LCOR acquired the parcel from Verizon Communications Inc. in July for $9.5 million, according to county land records.

  • 7 Stocks Warren Buffett Can’t Stop Buying
    Finance
    InvestorPlace

    7 Stocks Warren Buffett Can’t Stop Buying

    Sometimes identifying the best stocks to buy can be difficult, but you could do a lot worse than checking out the stocks selected by one of the world’s savviest hedge fund managers — Warren Buffett. Buffett’s stock picks are a popular source for investors, and for good reason. The billionaire Buffett is many things: He’s among the world’s most successful fund managers, a legendary philanthropist and owns more than 60 companies.

  • Aurora Cannabis Gets License for Aurora Sky Facility
    Finance
    Market Realist

    Aurora Cannabis Gets License for Aurora Sky Facility

    Key Updates from the Cannabis Sector after Legalization in Canada (Continued from Prior Part) Aurora Sky license On October 17, Aurora Cannabis (ACB) (ACBFF) announced that it received sales licenses from Health Canada. Aurora Cannabis stated that with

  • Finance
    CNBC

    China's stock market is getting pummeled and history shows that is bad news for US markets

    U.S. stocks are lower about 70 percent of the time in periods when there are big drops of 10 percent or more in Shanghai stocks, according to analytics firm Kensho. The main U.S. indexes lose about 5 percent when Shanghai stocks fall 10 percent or more in a 30-day period. Big blue chips, like Goldman and Caterpillar are among the losers, but copper and oil also fall hard when Shanghai sees a big decline.

  • Uber driver charged with kidnapping New York woman
    News
    Associated Press

    Uber driver charged with kidnapping New York woman

    An Uber driver in New York City kidnapped a woman who fell asleep in his vehicle, groped her in the back seat and then left her on the side of a highway in Connecticut, federal authorities said Tuesday. Harbir Parmar, 24, of Queens, was charged in U.S. District Court with kidnapping. "The presumption of innocence remains with my client," Parmar's lawyer, Susanne Brody, told The New York Times at the courthouse after the hearing.

  • Business
    Benzinga

    Blackstone Group Q3 Earnings Preview

    On Thursday, Blackstone Group (NYSE: BX) will release its latest earnings report. Benzinga's outlook for Blackstone Group is included in the following report. Earnings and Revenue Analysts expect Blackstone Group earnings of 75 cents per share. Revenue

  • Markets think the midterms could be as big as the presidential election
    Finance
    Yahoo Finance

    Markets think the midterms could be as big as the presidential election

    The midterm elections are less than three weeks away. According to strategists at Barclays, the options market is pricing in a 1.6% swing on election night, a modest swing given the recent volatility we’ve seen in the stock market.

  • Why American Airlines Group Stock Jumped 6% -- Then Gave Most of It Back
    Business
    Motley Fool

    Why American Airlines Group Stock Jumped 6% -- Then Gave Most of It Back

    Shares of American Airlines Group (NASDAQ: AAL) popped 6.4% in early trading Wednesday before retracting to close the day up less than 1% -- just 0.9%, to be precise. An upgrade assigned to the stock by Deutsche Bank appears to be the primary reason for the move. A Deutsche Bank analyst upgraded American Airlines stock from "hold" to "buy" on Wednesday, as we're told by our friends at StreetInsider.com.

  • Netflix needs lower prices to woo India
    Business
    Reuters

    Netflix needs lower prices to woo India

    MUMBAI/BENGALURU (Reuters) - Netflix Inc's (NFLX.O) Indian operation drew attention in a surge of international subscribers in the third quarter, but it faces fierce competition and a difficult cultural conundrum to make inroads with the country's more than one billion TV viewers. In a few short months, the world leader in video streaming has launched a blockbuster Mumbai-based crime thriller, been sued over comments about a former Indian Prime Minister and seen the future of two of its hit shows threatened by the #MeToo movement in India. Helped by a roster that includes top-grossing movie franchise "Baahubali", it has won fans among a young, tech savvy middle class and Chief Executive Officer Reed Hastings has said India could deliver the service's next 100 million subscribers.

  • Death of Saudi dissident may gut Bay Area tech investment
    Finance
    American City Business Journals

    Death of Saudi dissident may gut Bay Area tech investment

    New gruesome details have emerged about the killing of dissident journalist Jamal Khashoggi by Saudi agents. As evidence mounts that the Washington Post columnist’s brutal death is tied to Saudi Arabia's ruling crown prince, Bay Area tech companies could see the river of money from Saudi investments dry up. The Kingdom has pumped billions of dollars into the region's tech startups and giants in recent years.

  • Robinhood fires back after criticism
    SPY
    Yahoo Finance Video

    Robinhood fires back after criticism

    When Robinhood launched in 2015, it was touted as an app that allows commission-free trading for everything from stocks to ETFs to cryptocurrencies. But a report from Bloomberg says Robinhood makes more than 40 percent of its revenue from selling its data to high-frequency trading firms. Yahoo Finance's Seana Smith, Dan Roberts and Adam Shapiro talk with Robinhood co-founder Vlad Tenev.

  • Intel restructures manufacturing organization
    Finance
    American City Business Journals

    Intel restructures manufacturing organization

    Chip giant Intel is restructuring its technology and manufacturing business group as it chases more connected device markets and grapples with delays on its next chip generation. In a memo to employees, reviewed by the Business Journal, Group President and Chief Engineering Officer Murthy Renduchintala described splitting the technology and manufacturing business into three groups. The three new groups are technology development, manufacturing and operations and global supply chain.

  • Is Tilray a Better Marijuana Stock to Buy Than Aurora Cannabis?
    Business
    Motley Fool

    Is Tilray a Better Marijuana Stock to Buy Than Aurora Cannabis?

    Marijuana users are cheering the legalization of marijuana for recreational use in Canada, but it's not just pot advocates who are excited. Investors are also upbeat because the recreational market for marijuana represents a massive opportunity for sales growth for leading Canadian cannabis companies, including Tilray Inc. (NASDAQ: TLRY) and Aurora Cannabis (NASDAQOTH: ACBFF). Medical marijuana has been legal in Canada for years, and while medical marijuana sales total in the hundreds of millions of dollars annually, the potential market opportunity associated with recreational use is significantly bigger.

  • Don't Fall Into These 2 Yield Traps: This Stock Is a Better Buy
    Business
    Motley Fool

    Don't Fall Into These 2 Yield Traps: This Stock Is a Better Buy

    For example, USA Compression Partners LP (NYSE: USAC) and CSI Compressco LP (NASDAQ: CCLP) offer investors yields of 12% and 13%, respectively, but they provide a niche service, and results can be volatile. Leverage can be great when things are going well, but can cause problems when times are tough.

  • The same question that can chart a path to early retirement is the one Warren Buffett used to build Berkshire Hathaway into a powerhouse
    Business
    Business Insider

    The same question that can chart a path to early retirement is the one Warren Buffett used to build Berkshire Hathaway into a powerhouse

    Inversion is a mental model that involves flipping your outlook to prevent the opposite of what you want to happen from happening. Warren Buffett and his business partner Charlie Munger employed inversion as a business strategy to build Berkshire Hathaway into a powerhouse. In a recent podcast with Brandon of the Mad Fientist, who retired early at 34, productivity expert James Clear said the same strategy Buffett used can help set someone on the path for early retirement.

  • Kinder Morgan Beats Q3 Earnings Estimates, Improves Leverage
    Finance
    Market Realist

    Kinder Morgan Beats Q3 Earnings Estimates, Improves Leverage

    Kinder Morgan Beats Q3 Earnings Estimates, Improves Leverage Kinder Morgan’s third-quarter results Kinder Morgan (KMI) announced its third-quarter results on October 17 after the markets closed. The company announced an adjusted EPS of $0.21—up ~40%

  • Pfizer Offers Early Retirement to U.S. Employees Ahead of Layoffs
    Business
    Fortune

    Pfizer Offers Early Retirement to U.S. Employees Ahead of Layoffs

    Pfizer is offering U.S. employees early retirement ahead of company cuts that will hit around 2% of its 90,000 workers worldwide, CNBC reports. In an internal message to employees Tuesday, the company said the layoffs are a part of restructuring that aims to “simplify the organization to avoid duplication, create single points of accountability and reduce the number of layers within teams,” the New York Business Journal reports. “As we prepare for growth we are creating a simpler more efficient structure which will affect some managerial roles and responsibilities,” a Pfizer spokeswoman told CBNC.

  • Alibaba (BABA) Dips More Than Broader Markets: What You Should Know
    Finance
    Zacks

    Alibaba (BABA) Dips More Than Broader Markets: What You Should Know

    Investors will be hoping for strength from BABA as it approaches its next earnings release, which is expected to be November 2, 2018. On that day, BABA is projected to report earnings of $1.16 per share, which would represent a year-over-year decline of 10.08%. Investors should also note any recent changes to analyst estimates for BABA.