Defense Stock Roundup: LHX Beats on Q4 Earnings, SPR and TDG Miss
Solid quarterly results from the majority of the defense majors in the past five trading sessions must have kept the bourses buoyant. Consequently, the S&P 500 Aerospace & Defense (Industry) index rose 2.3%, while the Dow Jones U.S. Aerospace & Defense index went up 2% in the trailing five trading sessions.
In the past week, L3Harris Technologies LHX, Spirit AeroSystems Holdings SPR and TransDigm Group TDG reported quarterly results. Meanwhile, Raytheon Technologies RTX won a notable contract.
Recap of the Past Week’s Important Stories
1. L3Harris reported fourth-quarter 2021 adjusted earnings from continuing operations of $3.30 per share, which surpassed the Zacks Consensus Estimate by 1.5% and also increased 5% from the year-ago quarter. Its revenues came in at $4,350 million, which missed the Zacks Consensus Estimate by 2.7% and also declined 7% from the year-ago quarter’s reported figure.
As of Dec 31, 2021, L3Harris had $941 million in cash and cash equivalents compared with $1,276 million as of Jan 1, 2021.
L3Harris currently expects to generate earnings in the range of $13.35-$13.65 per share on revenues of $17.5 billion in 2022 (read more: L3Harris Q4 Earnings Top Estimates, Revenues Fall Y/Y)
2. Spirit AeroSysytems’ fourth-quarter 2021 adjusted loss of 84 cents per share was wider than the Zacks Consensus Estimate of a loss of 63 cents. However, the bottom line improved from the year-ago quarter’s loss of $1.31 per share. Its sales of $1.07 billion surpassed the Zacks Consensus Estimate by 2.8%. Moreover, the top line improved 22% on a year-over-year basis.
The company’s backlog at the end of the fourth quarter of 2021 was $35 billion compared with $33 billion at the end of the third quarter of 2021.
Its cash outflow from operating activities was $63.2 million at the end of 2021 compared with $744.9 million at the end of 2020 (read more: Spirit AeroSystems Q4 Earnings Lag Estimates, Revenues Top).
3. TransDigm’s first-quarter fiscal 2022 adjusted earnings of $3 per share missed the Zacks Consensus Estimate by 3.2%. The bottom line however improved a solid 52.3% from $1.97 reported a year ago. Its net sales amounted to $1,194 million in the fiscal first quarter, increasing 8% from the prior-year quarter. The reported figure however missed the Zacks Consensus Estimate by 2.5%.
TransDigm ended first-quarter fiscal 2022 with cash and cash equivalents of $4,813 million, up from $4,787 million as of Sep 30, 2021.
The company’s cash from operating activities amounted to $279 million as of Jan 1, 2022, compared with $274 million as of Jan 2, 2021 (read more: TransDigm's Q1 Earnings Miss Estimates, Sales Rise Y/Y.)
4. Raytheon clinched a notable contract worth $105 million, involving the technical collections and communications field service representatives (TCC-FSR) services, in order to support U.S. Special Operations Command Special Reconnaissance.
Work related to this contract will be executed across various U.S. locations, which in turn is projected to be completed by Mar 31, 2027.
Performance
Over the past five trading sessions, the defense biggies put up a solid show. Raytheon gained the most, with its shares appreciating 4.8%, followed by Textron.
In the last six months, the industry's performance was impressive, except for Boeing, Textron and L3Harris. Lockheed gained the most with its shares up 9.4%, followed by General Dynamics, which gained 7.8%.
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 | 2.2% | 9.39% |
BA | 2.37% | -8.39% |
GD | 0.75% | 7.73% |
RTX | 4.78% | 7.36% |
NOC | 2.36% | 4.75% |
TXT | 0.25% | -7.08% |
LHX | 4.30% | -5.34% |
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Transdigm Group Incorporated (TDG) : Free Stock Analysis Report
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