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Defense Stock Roundup: LMT, NOC, TDY Beat on Q3 Earnings, HXL Misses

Aparajita Dutta
·4 min read

Some major defense contractors released their Q3 results in the past week, coming up with mixed performance. However, in the broader market space, Wall Street has tumbled in the latest session driven by worries surrounding resurging COVID cases in the United States coupled with uncertainties looming around upcoming elections next month. Following this, major indices of the Aerospace-Defense space ended up in the red zone over the trailing five trading sessions. Evidently, the S&P 500 Aerospace & Defense (Industry) index dropped 1.8%, while the Dow Jones U.S. Aerospace & Defense index slipped 0.4% in the aforementioned time period.

In the past week, Lockheed Martin LMT, Northrop Grumman NOC, Teledyne Technologies TDY and Hexcel HXL reported their Q3 results.

Recap of Past Week’s Important Stories

1.    Lockheed reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate by 3% and also improved 10.4% on a year-over-year basis.  Its net sales of $16,495 million outshined the Zacks Consensus Estimate by 1.8% and also increased 8.7% from the year-ago quarter.

Lockheed Martin ended the third quarter (on Sep 27, 2020) with $150.4 billion in backlog, up 4.4% from the 2019-end figure.

Lockheed Martin’s cash and cash equivalents totaled $3.59 billion as of Sep 27, 2020, compared with $1.51 billion at the end of 2019. The company raised its revenue and earnings guidance for 2020 (read more: Lockheed Martin Beats on Q3 Earnings, Ups 2020 EPS View).

2.    Northrop reported third-quarter 2020 earnings of $5.89 per share, which surpassed the Zacks Consensus Estimate by 5.2% and improved 7% year over year. Its total sales of $9,083 million surpassed the Zacks Consensus Estimate by 2.77% and also grew 7% from the year-ago quarter’s reported figure.

The company’s total backlog at the end of third-quarter 2020 was $81.3 billion, of which funded backlog amounted to $33.3 billion.

Northrop Grumman’s cash and cash equivalents as of Sep 30, 2020 was $4,995 million, up from $2,245 million as of Dec 31, 2019. Northrop Grumman raised its 2020 financial guidance (read more: Northrop Grumman Beats on Q3 Earnings, Ups '20 View).

3.    Teledyne Technologies’ third-quarter 2020 adjusted earnings of $2.48 per share, surpassed the Zacks Consensus Estimate by 3.3%. Its total sales amounted to $749 million, which missed the Zacks Consensus Estimate by 0.5% and also declined 6.6% year over year.

Teledyne’s cash totaled $454.5 million as of Sep 27, 2020, compared with $199.5 million at the end of 2019.

Moreover, the company generated free cash flow of $135.1 million in the third quarter, reflecting 7.4% annual growth. For 2020, Teledyne raised the lower end of its earlier expected earnings guidance range (read more: Teledyne Q3 Earnings Top Estimates, Sales Decline Y/Y).

4.    Hexcel reported third-quarter 2020 loss of 29 cents per share against the Zacks Consensus Estimate of earnings of 7 cents. The bottom line also deteriorated from the prior-year quarter’s earnings per share of 90 cents. Its net sales of $286.9 million missed the Zacks Consensus Estimate by 17.4% and also declined 49.9% from the year-ago quarter’s reported figure.

As of Sep 30, 2020, the company’s cash and cash equivalents were $68 million compared with $64.4 million as of Dec 31, 2019.

At the end of third-quarter 2020, cash generated from operating activities summed $157 million compared with $277.3 million generated at the end of third-quarter 2019 (read more: Hexcel Reports Loss in Q3, Misses Revenue Estimates).

Performance

Over the past five trading sessions, the defense biggies mostly put up a poor show, except for Lockheed and Northrop. Boeing lost the most, with its share price declining 3.8%, followed by Textron TXT.

In the last six months, the industry's performance was mixed. Boeing gained the most this time, up 30% while Northrop lost 4%.

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

0.12%

-3.46%

BA

-3.82%

29.76%

GD

-0.02%

0.84%

RTX

-0.52%

-2.47%

NOC

0.50%

-4.92%

TXT

-3.17%

4.82%

LHX

-0.28%

-3.35%

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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Textron Inc. (TXT) : Free Stock Analysis Report
 
Hexcel Corporation (HXL) : Free Stock Analysis Report
 
Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report
 
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