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Defense Stocks to Report Q2 Earnings This Week: LMT, HXL, TXT
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U.S. defense stocks have had a good year up till now, propelled by geopolitical factors. As we are on the threshold of another earnings season - the second quarter of 2016 - the outlook for the aerospace and defense sector is not so bad when compared with the overall Q2 forecast. Total earnings are likely to be down 5.4% on 0.5% lower revenues, with growth in the negative territory for 9 of the 16 Zacks sectors.
In contrast, the aerospace and defense sector is expected to register a 5.4% increase in earnings on 1.4% revenue growth, as per Zacks Trend report.
The S&P 500 Aerospace & Defense (Industry) index has appreciated 8.18% so far this year. In comparison, the S&P 500 index has shown 5.76% growth over the same period.
This week, investors will be closely watching the performance of Lockheed Martin Corp. (LMT - Free Report) , a frontrunner in defense, and other key players like Textron (TXT - Free Report) and Hexcel Corp. (HXL - Free Report) for likely beats or misses.
The defense sector is expected to return to growth in 2016 from declines suffered in the past three years as a result of weak U.S. defense budgets. The boost in defense budgets, both in the U.S. and in important allied nations, spurred by global security threats is expected to be a vital tailwind for the sector as a whole.
That said, "disproportionate" cuts to modernization and research and development funding could act as major impediments to the defense industry that is already facing volatility.
Let’s have a look at the three defense companies that are about to release their results this week.
First and foremost, Lockheed Martin Corp. is set to release second-quarter results before the market opens on Jul 19. The prime defense contractor has an Earnings ESP of +1.37% and carries a Zacks Rank #2 (Buy).
As per the Zacks Consensus Estimate, the defense giant's EPS will likely dip 0.68% to $2.92, but revenues are expected to climb 7.58% to $12.53 billion.
The company secured quite a few major contracts from the Pentagon as well as from foreign allies, helping it to remain in the limelight. Importantly, revenues will likely be rising on its F-35 program. The company expects organic growth of 3–5% this year to be led primarily by the Aeronautics segment and specifically by the F-35 program. It has plans to deliver 43 F-35s in 2016 (read more: Will Lockheed Keep its Earnings Streak Alive in Q2).
Hexcel Corp. develops, manufactures and markets structural materials for use in commercial aerospace, space and defense, and industrial markets. The company is slated to report second-quarter results after the closing bell on Jul 20.
The company expects Space & Defense sales to remain challenging this year when compared with 2015 levels due to reductions in a few of the Sikorsky programs, both from lower spare blade orders and commercial helicopter demand.
Yet, Hexcel believes other segments like Commercial Aerospace and Industrials will likely offset the negative impact from its Space & Defense division. The company anticipates robust growth in its Commercial Aerospace market given the company’s position on new programs such as the A350, the A320neo, and the 737 Max.
Hexcel has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).
Textron Inc. will report second-quarter 2016 earnings on Jul 22 before the opening bell.
On the first quarter 2016 earnings call, the company refrained from providing any guidance for the second quarter. Nevertheless, it provided its outlook for the entire year. Textron expects revenues to witness solid growth at the Aviation, Industrial and Systems segments. However, Textron also foresees flattish growth at Bell Helicopter.
Stay tuned! Check later for our full write-up on earnings releases of these stocks.
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Defense Stocks to Report Q2 Earnings This Week: LMT, HXL, TXT
U.S. defense stocks have had a good year up till now, propelled by geopolitical factors. As we are on the threshold of another earnings season - the second quarter of 2016 - the outlook for the aerospace and defense sector is not so bad when compared with the overall Q2 forecast. Total earnings are likely to be down 5.4% on 0.5% lower revenues, with growth in the negative territory for 9 of the 16 Zacks sectors.
In contrast, the aerospace and defense sector is expected to register a 5.4% increase in earnings on 1.4% revenue growth, as per Zacks Trend report.
The S&P 500 Aerospace & Defense (Industry) index has appreciated 8.18% so far this year. In comparison, the S&P 500 index has shown 5.76% growth over the same period.
This week, investors will be closely watching the performance of Lockheed Martin Corp. (LMT - Free Report) , a frontrunner in defense, and other key players like Textron (TXT - Free Report) and Hexcel Corp. (HXL - Free Report) for likely beats or misses.
The defense sector is expected to return to growth in 2016 from declines suffered in the past three years as a result of weak U.S. defense budgets. The boost in defense budgets, both in the U.S. and in important allied nations, spurred by global security threats is expected to be a vital tailwind for the sector as a whole.
That said, "disproportionate" cuts to modernization and research and development funding could act as major impediments to the defense industry that is already facing volatility.
Let’s have a look at the three defense companies that are about to release their results this week.
First and foremost, Lockheed Martin Corp. is set to release second-quarter results before the market opens on Jul 19. The prime defense contractor has an Earnings ESP of +1.37% and carries a Zacks Rank #2 (Buy).
As per the Zacks Consensus Estimate, the defense giant's EPS will likely dip 0.68% to $2.92, but revenues are expected to climb 7.58% to $12.53 billion.
The company secured quite a few major contracts from the Pentagon as well as from foreign allies, helping it to remain in the limelight. Importantly, revenues will likely be rising on its F-35 program. The company expects organic growth of 3–5% this year to be led primarily by the Aeronautics segment and specifically by the F-35 program. It has plans to deliver 43 F-35s in 2016 (read more: Will Lockheed Keep its Earnings Streak Alive in Q2).
LOCKHEED MARTIN Price and EPS Surprise
LOCKHEED MARTIN Price and EPS Surprise | LOCKHEED MARTIN Quote
Hexcel Corp. develops, manufactures and markets structural materials for use in commercial aerospace, space and defense, and industrial markets. The company is slated to report second-quarter results after the closing bell on Jul 20.
The company expects Space & Defense sales to remain challenging this year when compared with 2015 levels due to reductions in a few of the Sikorsky programs, both from lower spare blade orders and commercial helicopter demand.
Yet, Hexcel believes other segments like Commercial Aerospace and Industrials will likely offset the negative impact from its Space & Defense division. The company anticipates robust growth in its Commercial Aerospace market given the company’s position on new programs such as the A350, the A320neo, and the 737 Max.
Hexcel has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).
HEXCEL CORP Price and EPS Surprise
HEXCEL CORP Price and EPS Surprise | HEXCEL CORP Quote
Textron Inc. will report second-quarter 2016 earnings on Jul 22 before the opening bell.
On the first quarter 2016 earnings call, the company refrained from providing any guidance for the second quarter. Nevertheless, it provided its outlook for the entire year. Textron expects revenues to witness solid growth at the Aviation, Industrial and Systems segments. However, Textron also foresees flattish growth at Bell Helicopter.
Textron has an Earnings ESP of +3.23% and a Zacks Rank #3 (Hold), which imply a likely beat in the soon-to-be-reported quarter (read more: Defense Stock Textron to Beat Q2 Earnings Estimates).
TEXTRON INC Price and EPS Surprise
TEXTRON INC Price and EPS Surprise | TEXTRON INC Quote
Stay tuned! Check later for our full write-up on earnings releases of these stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>