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Defense Stock Roundup: RTX, GD, NOC Beat on Q2 Earnings, BA Misses

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Given modest Q2 numbers, the major indices of the Aerospace-Defense space did not perform well over the trailing five trading sessions. Notably, both the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense indices dipped 1.1% in the aforementioned time period.

In the past week, quarterly results from a number of Aerospace-Defense majors namely,  Raytheon Technologies (RTX - Free Report) , The Boeing Company (BA - Free Report) , General Dynamics Corp. (GD - Free Report) , Northrop Grumman Corp. (NOC - Free Report) and Textron Inc. (TXT - Free Report) drew investors’ focus.

Recap of Past Week’s Important Stories

1.    Raytheon Technologies’ second-quarter 2020 adjusted earnings per share (EPS) of 40 cents outpaced the Zacks Consensus Estimate by 300%but declined 67.7% from the year-ago quarter figure.

The company’s second-quarter sales of $14,061 million declined 24.1% on a year-over-year basis. The top line, however, beat the Zacks Consensus Estimate by 0.6%.

Raytheon Technologies ended Jun 30, 2020 with cash and cash equivalents of $6,975 million, up from $4,937 million as of Dec 31, 2019 (read more: Raytheon Technologies Q2 Earnings Beat, Sales Fall Y/Y).

2.    Boeing incurred adjusted loss of $4.79 per share for second-quarter 2020, wider than the Zacks Consensus Estimate. However, the bottom line improved from the year-ago quarter’s loss.

Its revenues amounted to $11.81 billion, which missed the Zacks Consensus Estimate by 6.3% and declined 25% from the year-ago quarter’s figure.

Boeing exited the second quarter with cash and cash equivalents of $20 billion, compared with$7.64 billion at the end of 2019 (read more: Boeing Q2 Earnings Miss Estimates, Sales Decline Y/Y).

3.    General Dynamics’ second-quarter 2020 earnings from continuing operations of $2.18 per share beat the Zacks Consensus Estimate by 1.89% but plunged 21.3% from the year-ago quarter.

Second-quarter revenues of $9,264 million surpassed the Zacks Consensus Estimate by 1.7%. However, revenues declined 3% from the year-ago quarter.

As of Jun 28, 2020, General Dynamics’ cash and cash equivalents were $2,300 million compared with $902 million on Dec 31, 2019 (read more: General Dynamics' Q2 Earnings Beat, Backlog Up Y/Y).

4.    Northrop Grumman’s second-quarter 2020 earnings of $6.01 per share surpassed the Zacks Consensus Estimate by 12.1% and increased 19% from the year-ago quarter.

Its total sales of $8,884 million surpassed the Zacks Consensus Estimate by 3.4% and increased 5% from the year-ago quarter’s figure.

Northrop Grumman’s cash and cash equivalents as of Jun 30, 2020 were $4,178 million, up from $2,245 million as of Dec 31, 2019 (read more: Northrop Grumman Beats on Q2 Earnings, Ups '20 View).

5.    Textron reported second-quarter 2020 adjusted earnings of 13 cents per share against the Zacks Consensus Estimate of a loss of 15 cents. Its total revenues came in at $2,472 million, which surpassed the Zacks Consensus Estimate by 5.1% but decreased 23.5% from the year-ago quarter figure.

As of Jul 4, 2020, Textron’s cash and cash equivalents totaled $2,176 million compared with $1,181 million as of Jan 4, 2020.

Cash outflow from operating activities amounted to $148 million at the end of the second quarter compared with cash outflow of $33 million at the end of the prior-year period (read more: Textron Q2 Earnings Beat Estimates, Revenues Fall Y/Y).

Performance

Over the past five trading sessions, the defense biggies put up a dismal show, except Northrop.  Raytheon Technologies lost the most with 6.3% decline in share price.

Over the last six months as well, the industry's performance has also been disappointing, except Lockheed Martin. This time, Boeing lost the most with almost 50% slump in share price.

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

CompanyPast WeekLast 6 Months
LMT-0.96%1.13%
BA-8.00%-48.65%
GD-1.16%-28.89%
RTX-6.30%-29.79%
NOC5.74%-6.84%
TXT-3.00%-44.15%
LHX-0.21%-3.83%

What’s Next?

Leidos Holdings (LDOS - Free Report) is set to release its second-quarter 2020 numbers on Aug 4, while Huntington Ingalls Industries (HII - Free Report) is scheduled to report its quarterly results on Aug 6.

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