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Defense Stock Roundup: RTX, GD Beat on Q1 Earnings, BA Misses

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In the past five trading sessions, some key defense players reported results, displaying a mixed quarterly performance. So, the overall impact of quarterly results on the bourses was not very impressive. Consequently, the S&P 500 Aerospace & Defense (Industry) index dropped 5.3%, while the Dow Jones U.S. Aerospace & Defense index went down 5.2% in the trailing five trading sessions.

In the past week, Raytheon Technologies (RTX - Free Report) , The Boeing Company (BA - Free Report) , General Dynamics (GD - Free Report) , Northrop Grumman (NOC - Free Report) and Textron Inc. (TXT - Free Report) reported Q1 results.

Recap of Past Week’s Important Stories

1.    Raytheon Technologies’ first-quarter 2022 adjusted earnings per share (EPS) of $1.15 beat the Zacks Consensus Estimate by 13.9% and improved 27.8% year over year. Its first-quarter sales of $15,716 million missed the Zacks Consensus Estimate by 0.5%. The sales figure, however, rose 3% year over year.

Net cash inflow from operating activities for the company amounted to $476 million during the first quarter compared with $723 million in first-quarter 2021.

The company still projects adjusted EPS in the range of $4.60-$4.80 (read more: Raytheon Technologies Q1 Earnings Top, Sales View Cut).

2.    Boeing incurred an adjusted loss of $2.75 per share for first-quarter 2022, which came in much wider than the Zacks Consensus Estimate. Also, the bottom line deteriorated from the year-ago quarter’s reported figure. Its revenues amounted to $13.99 billion, which missed the Zacks Consensus Estimate by 12.6% and declined 8% year over year.

Its backlog at the end of first-quarter 2022 decreased to $370.84 billion from $377.50 billion at the end of 2021.

Free cash outflow totaled $3.57 billion at the end of first-quarter 2022 compared with $3.68 billion at the end of first-quarter 2021 (read more: Boeing Q1 Earnings Miss Estimates, Revenues Decline Y/Y).

3.    General Dynamics reported first-quarter 2022 EPS of $2.61, which beat the Zacks Consensus Estimate by 4.8% and rose 5.2% year over year. Its first-quarter revenues of $9,392 million surpassed the Zacks Consensus Estimate by 4.6%. Revenues remained almost flat with the year-ago quarter.

General Dynamics recorded a total backlog of $87.23 billion, down 0.4% from 2021-end’s backlog.

In the first quarter of 2022, GD generated cash from operating activities of $1,968 million, escalating sharply from only $3 million generated in the year-ago period (read more: General Dynamics Q1 Earnings Top, Revenues Flat Y/Y).

4.    Northrop Grumman reported first-quarter 2022 earnings of $6.10 per share, which surpassed the Zacks Consensus Estimate by 2.5% but decreased 54.6% year over year. Its total sales of $8.80 billion missed the Zacks Consensus Estimate by 0.9% and decreased 4% year over year.

Northrop Grumman’s total backlog stood at $75.79 billion at the end of first-quarter 2022 compared with $76.05 billion at the 2021 end.

Net cash outflow from operating activities at the end of the first quarter was $488 million compared with $66 million as of Mar 31, 2021 (read more: Northrop Grumman's Q1 Earnings Top, Sales Decline Y/Y).

5.    Textron reported first-quarter 2022 earnings of 88 cents per share, which surpassed the Zacks Consensus Estimate by 22.2% and also improved 17.3% year over year. Its revenues came in at $3,001 million, which beat the Zacks Consensus Estimate by 0.9% and increased 4.2% year over year.

As of Apr 2, 2022, the company’s cash and cash equivalents totaled $1,978 million compared with $1,922 million as of Jan 1, 2022.

Textron’s long-term debt was $3,178 million as of Apr 2, 2022 compared with $3,179 million as of Jan 1, 2022 (read more: Textron Q1 Earnings Beat Estimates, Revenues Rise Y/Y).

Performance

Over the past five trading sessions, the defense biggies put up a dismal show except Textron. Boeing lost the most, with its share price having declined 15.5%.

In the last six months, the industry's performance was impressive, except for Boeing and Textron. Lockheed gained the most with its shares up 32%, followed by Northrop, which gained 24.2%.

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-2.72%32.02%
BA-15.5%-30.15%
GD-2.48%15.61%
RTX-5.41%7.31%
NOC-1.22%24.18%
TXT2.56%-6.98%
LHX-3.14%7.69%