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Defense Stocks to Watch for Q3 Earnings on Oct 27: BA, GD & TDY

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·4 min read
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The Q3 reporting cycle for defense stocks started on Oct 18 with the release of Hexcel Corp.’s HXL results. The company posted better-than-expected earnings while sales missed estimates. Some major defense players are set to reveal their Q3 numbers this week.

Factors That Influenced Defense Players in Q3

The upcoming quarterly results of defense bigwigs are expected to reflect impressive numbers buoyed by stable order growth in the past couple of quarters, along with smooth deliveries of finished products. With the economy recovering gradually from the initial impacts of the COVID-19 pandemic, which had created a shipment bottleneck last year, deliveries of defense products have improved in recent times.

Such smooth delivery flow must have boosted the revenue stream of major defense contractors.

On the commercial aerospace front, the situation has improved given the uptick observed in global air traffic over the past few months. Boeing BA witnessed a massive 204% improvement in its Q3 commercial delivery numbers. With Boeing being the largest jet maker in the nation, we expect Q3 results of the remaining defense players, with a strong presence in the commercial aerospace market, to reflect a similar improvement in delivery trends.

Although issues like supply chain disruption along with the absence of cash flow within the industry have moderated compared to the last year, there may be some lingering effects on Q3 results of some of the companies.

Considering the aforementioned factors, we remain optimistic about the overall performance of the aerospace stocks this time around.

Q3 Projections

Third-quarter earnings of the Aerospace sector, which houses major defense stocks, are expected to improve 9.8% year over year on 8.9% revenue growth.

For more details on quarterly releases, you can go through the latest Earnings Preview.

Defense Earnings to Watch on Oct 27

Boeing’s third-quarter deliveries reflected a massive surge in commercial shipments from the year-ago reported figure. Defense shipments, however, remained flat. The significant improvement witnessed in the jet maker’s commercial deliveries is expected to have offset flat defense deliveries, thereby making us optimistic about Boeing’s overall third-quarter results.

Increased airline flight operations are expected to have boosted aftermarket commercial jet services in the third quarter of 2021. This, in turn, must have bolstered the BGS unit’s revenues in the yet-to-be-reported quarter (read more: Higher Commercial Deliveries to Aid Boeing in Q3 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing has an Earnings ESP of -76.97% 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 and EPS Surprise
The Boeing Company Price and EPS Surprise

The Boeing Company price-eps-surprise | The Boeing Company Quote

General Dynamics’ GD Q3 results are expected to reflect improved quarterly figures, thanks to recovering air traffic trends observed in commercial aerospace during the third quarter and an expected favorable sales performance.

Segment-wise, its combat systems, marine systems as well as Aerospace business units are forecast to report year-over-year growth. In particular, a solid rebound expected in its Aerospace unit’s performance driven by improving air traffic statistics must have boosted the overall revenue performance.

General Dynamics has an Earnings ESP of 0.00% and a Zacks Rank #2 (read more: Will Aerospace Segment Aid General Dynamics Q3 Earnings?).

General Dynamics Corporation Price and EPS Surprise

General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation Price and EPS Surprise

General Dynamics Corporation price-eps-surprise | General Dynamics Corporation Quote

Teledyne Technologies’ TDY Q3 results are expected to benefit from factors like FLIR acquisition along with increased sales expectations for commercial aerospace products, backed by a gradual recovery in the commercial aerospace market of late.

The company has been trying hard to eliminate costs related to certain corporate overheads, consultants and other third-party service providers, which in turn may have boosted its bottom-line performance in the to-be-reported quarter.

Teledyne has an Earnings ESP of 0.00% and a Zacks Rank #3 (read more: What Awaits Teledyne Technologies in Q3 Earnings?).

Teledyne Technologies Incorporated Price and EPS Surprise

Teledyne Technologies Incorporated Price and EPS Surprise
Teledyne Technologies Incorporated Price and EPS Surprise

Teledyne Technologies Incorporated price-eps-surprise | Teledyne Technologies Incorporated Quote



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