With the Q4 earnings season picking up pace, this reporting cycle has so far portrayed steady improvement in the overall earnings picture. Also, this quarter is likely on track to record the best performance in the trailing eight quarters. Coming to aerospace and defense, the sector stands second to Finance in terms of positive growth.

Impressively, 85.7% of the aerospace and defense companies have posted a beat this quarter (as of Jan 26, 2017). Consequently, major indices for the Aerospace-Defense industry witnessed positive growth during the last five sessions. While the S&P 500 Aerospace & Defense (industry) Index gained 0.9%, the Dow Jones U.S. Aerospace & Defense Index inched up 1.9%.

Among last week’s highlights, defense primes Rockwell Collins, Inc. , L3 Technologies Inc , Northrop Grumman Corp. (NOC Quick QuoteNOC - Free Report) , The Boeing Company (BA Quick QuoteBA - Free Report) , United Technologies Corp. and Lockheed Martin Corp. (LMT Quick QuoteLMT - Free Report) reported an earnings beat. However,Textron, Inc. (TXT Quick QuoteTXT - Free Report) missed earnings.

(Read Defense Stock Roundup for Jan 20, 2017 here)

Recap of the Week’s Most Important Stories

1. Rockwell Collins reported financial results for first-quarter fiscal 2017 ended Dec 31, 2016. The company’s adjusted earnings per share of $1.20 surpassed the Zacks Consensus Estimate of $1.15 by 4.3% but slipped 0.8% from $1.21 earned a year ago.

The company’s total sales were $1,193 million, below the Zacks Consensus Estimate of $1,204 million by 0.9%. Revenues, however, grew 2.1% year over year.

The company reiterated its fiscal 2017 revenue guidance at the range of $5.3–$5.4 billion. Total segment operating margin is still expected to be about 21% (read more: Rockwell Collins Tops Q1 Earnings, Keeps FY17 View).

2. Defense contractor L3 Technologies posted fourth-quarter 2016 adjusted earnings of $2.38 per share, beating the Zacks Consensus Estimate of $2.12 by 12.3%. Earnings also improved 10.2% from the year-ago figure of $2.16.

Total revenue of $2.99 billion in the quarter surpassed the Zacks Consensus Estimate of $2.77 billion by 7.9%. Funded orders in the reported quarter totaled $3.58 billion, reflecting a 39.7% year-over-year increase.

L3 Technologies has raised its 2017 outlook. The company now expects earnings in the range of $8.40−$8.60 per share (versus the prior range of $8.15−$8.35) with revenues projected at $10,625−$10,825 million (versus the prior range of $10,475−$10,675 billion) for 2017 (read more: L3 Technologies Tops Q4 Earnings, Lifts 2017 View).

3. Global security provider, Northrop Grumman reported fourth-quarter 2016 adjusted earnings of $2.66 per share, beating the Zacks Consensus Estimate of $2.49 by 6.8%. Excluding after-tax pension adjustments, earnings came in at $2.96, up 18.9% year over year.

In the fourth quarter of 2016, Northrop Grumman reported total revenue of $6.40 billion, beating the Zacks Consensus Estimate of $5.91 billion by 8.3%.

Northrop Grumman expects revenues of $25 billion for 2017. On the bottom-line front, the company expects to generate earnings in the range of $11.30–$11.60 (read more: Northrop Grumman Earnings and Revenues Top in Q4).

4. Aerospace giant Boeing reported adjusted earnings of $2.47 per share in fourth-quarter 2016, beating the Zacks Consensus Estimate of $2.34 by 5.6%. Reported earnings were also up 54.4% from the year-ago figure of $1.60.

The company's revenues amounted to $23.29 billion in the reported quarter, missing the Zacks Consensus Estimate of $23.44 billion by 0.6%. Backlog at the end of the fourth quarter was up to $473.0 billion from $489.3 billion at 2015-end.

Boeing provided its adjusted or core earnings per share expectation for 2017 in the range of $9.10–$9.30. GAAP earnings are expected in the band of $10.25–$10.45 per share. The company expects 2017 revenue in the range of $90.5−$92.5 billion (read more: Boeing Beats on Q4 Earnings, Provides 2017 Outlook)

5. United Technologies reported fourth-quarter 2016 adjusted earnings (from continuing operations) of $1.56 per share, in line with the Zacks Consensus Estimate.

Adjusted net sales for the fourth quarter were $14,659 million, compared with $14,652 million in the year-earlier quarter. Revenues beat the Zacks Consensus Estimate of $14,620 million.

The company expects adjusted earnings in the range of $6.30 to $6.60 per share on revenues of $57.5 billion to $59 billion. It reaffirmed its acquisition expectations at $1–$2 billion and free cash flow guidance at 90–100% of net income. (Read more: United Technologies Q4 Earnings Match, Affirms View)

6. Pentagon’s prime contractor, Lockheed Martin reported fourth-quarter 2016 earnings from continuing operations of $3.25 per share, surpassing the Zacks Consensus Estimate of $3.04 by 6.9%. Earnings also increased 23.6% from the year-ago level.

Total revenues came in at $13.75 billion, beating the Zacks Consensus Estimate of $13.09 billion by 5%. The company’s revenues increased 19.4% from $11.52 billion a year ago. Lockheed Martin ended 2016 (on Dec 31, 2016) with $96.2 billion in backlog, up 3.6% from $94.8 billion at 2015-end.

For 2017, Lockheed Martin expects to generate revenues in the range of $49.4–$50.6 billion. On the bottom-line front, the company projects earnings per share in the range of $12.25–$12.55 for 2017 (read more: Lockheed Martin Beats on Q4 Earnings, Backlog Rises).

7. Diversified U.S. conglomerate Textron reported fourth-quarter 2016 adjusted earnings from continuing operations of 80 cents per share, which missed the Zacks Consensus Estimate of 87 cents by 8%.

Total revenue in the quarter was $3.83 billion, missing the Zacks Consensus Estimate of $3.90 billion by 1.8%. Reported revenues, also, decreased 2.5% from the year-ago figure of $3.92 billion.

Along with its fourth-quarter earnings release, Textron announced that it has agreed to acquire Arctic Cat Inc. in a cash transaction valued at approximately $247 million. This will allow Textron to introduce its product in the outdoor recreational vehicle market.

The company expects adjusted earnings per share in the range of $2.50 to $2.70. On the top-line front, the company expects to generate revenues of $14.3 billion, reflecting a year-over-year improvement of 4% (read more: Textron Misses on Q4 Earnings, To Acquire Arctic Cat).

Last Week’s Performance

The major defense stocks put up a mixed show over the past five trading sessions. While Boeing, General Dynamics Corp. (GD Quick QuoteGD - Free Report) and L3 Technologies gained last week, defense biggies like Lockheed Martin, Northrop and a few others posted a weak performance.

Over the past six months, however, all the industry majors delivered a stellar performance. Notably, Boeing gained the maximum at 24.38%, followed by Textron.

The following table shows the price movement of the major defense players over the past five trading days and the last six months.

What’s Next in the Sector?

Spirit AeroSystems Holdings, Inc. SPR will release its fourth quarter and full-year 2016 results on Feb 1.

Harris Corporation HRS is slated to report its second-quarter fiscal 2017 results on Feb 2, while Triumph Group, Inc. TGI will report its third-quarter fiscal 2017 results on the same day.

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