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Defense Stocks to Post Q1 Earnings on Apr 26: BA, GD, NOC

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The Q1 earnings season in the defense sector started with the quarterly release of Textron Inc. (TXT - Free Report) on Apr 19. This multi-industry conglomerate’s earnings came in line with estimates. On the other hand, Rockwell Collins, Inc. reported better-than-expected numbers on Apr 21. Today, sector behemoth Lockheed Martin Corp. (LMT - Free Report) is scheduled to post its first-quarter 2017 results. In fact, the majority of the defense giants are expected to release their financial numbers this week.

As of Apr 21, 19% of the market cap of the S&P 500 index has reported quarterly results, revealing a 14.3% increase in earnings on 4.6% higher revenues. Overall, earnings are anticipated to record a 9.1% increase on 6% higher revenues, with five of the 16 Zacks sectors anticipating wider declines. The picture should become clearer by the end of this week, as a number of the index members are scheduled to report earnings.

Only 20% of the Aerospace and Defense sector (as of Apr 21) released their quarterly results, with 50% beating both EPS and revenue estimates. However, total Q1 earnings from the Aerospace and Defense sector are expected to decline 0.3% year over year on 2.1% lower revenues.  For more details on quarterly releases, you can go through our Earnings Preview report.

Let’s take a look at three defense companies—The Boeing Company (BA - Free Report) , General Dynamics Corp. (GD - Free Report) and Northrop Grumman Corporation (NOC - Free Report) —all of which are scheduled to release quarterly results before the opening bell on Apr 26.

Boeing reported a positive earnings surprise of 5.56% in the last quarter. Notably, the company outperformed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 21.42%.

Our proven model shows that Boeing is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. The company has the right combination of two key ingredients.

Boeing has an Earnings ESP of +0.52%. That is because while the Most Accurate estimate is pegged at $1.92, the Zacks Consensus Estimate is lower at $1.91. The company currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Boeing Company (The) Price and EPS Surprise

 

Boeing Company (The) Price and EPS Surprise | Boeing Company (The) Quote

General Dynamics reported a positive earnings surprise of 3.15% in the prior quarter. It is worth noting that General Dynamics outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.81%.

The Earnings ESP for General Dynamics is +0.86% because the Most Accurate estimate is $2.34, while the Zacks Consensus Estimate is pegged lower at $2.32. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Therefore General Dynamics is likely to beat earnings because it has the right combination of two key ingredients. (Read more: General Dynamics Q1 Earnings: A Beat in the Cards?)

Northrop Grumman reported a positive earnings surprise of 6.83% in the preceding quarter. It is worth noting that Northrop Grumman outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 7.61%.

Northrop Grumman has an Earnings ESP of +1.03%. That is because while the Most Accurate estimate is pegged at $2.93, the Zacks Consensus Estimate is lower at $2.90. The company has a Zacks Rank #2. Our proven model shows that Northrop Grumman is likely to beat earnings because it has the right combination of two key ingredients. (Read more: Is Northrop Grumman Poised for a Q1 Earnings Beat?)

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