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Aerospace & Defense Q1 Earnings Due on May 5: HII & SPCE

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So far, a handful of aerospace and defense stocks have released their Q1 report card, reflecting mixed results. Huntington Ingalls Industries (HII - Free Report) and Virgin Galactic Holdings (SPCE - Free Report) are set to reveal their Q1 numbers this week.

Factors That Influenced Aerospace & Defense Stocks

A steady recovery witnessed in global air travel, both domestic and international, is expected to boost the quarterly results of the aerospace and defense stocks, particularly those engaged in commercial aviation, in the first quarter. Boeing witnessed a solid year-over-year rise of 23.4% in its commercial shipments during the first quarter. With Boeing being the largest jet maker in the nation, we expect the Q1 results of the remaining aerospace majors to reflect a similar improvement in delivery trends. Such solid deliveries must have boosted the overall top-line growth of the Aerospace sector, which houses all aerospace and defense stocks.

On the other hand, stocks that are more focused on combat must have also gained as a result of steady government support. Moreover, a steady order flow observed in the past couple of quarters, along with improved deliveries in recent times, buoyed by recovering economic trends are projected to have bolstered Q1 revenues of aerospace and defense stocks.

However, persistent headwinds like supply chain disruption along with the slow pace of cash inflow within the industry might have had an adverse impact on the overall Q1 results of some of the industry majors.

Q1 Projections

Aerospace sector Q1 earnings are expected to improve 10.8% from the prior-year quarter’s reported figure, while revenues are projected to slip 0.4%.  

For more details on quarterly releases, you can go through the latest Earnings Preview.

Aerospace & Defense Stocks to Watch

Let's take a look at two defense companies that are scheduled to report first-quarter 2022 earnings on May 5 and find out how things have shaped up prior to the announcements.

Huntington Ingalls: Growth from the Virginia class and Columbia class submarine programs as well as revenues for carrier construction and overhaul is projected to have boosted Huntington’s Newport News unit’s Q1 performance. Acquisition benefits from the buyout of Alion are expected to have boosted sales growth of the Technical Solutions segment.

However, the divestiture of its oil and gas business might have adversely impacted the shipbuilder’s Q1 performance. The impact of the COVID-19 Omicron variant and the challenging labor market might also hurt HII’s results (read more: What Awaits Huntington Ingalls This Earnings Season?).

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls currently has an Earnings ESP of -3.83% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Huntington Ingalls Industries, Inc. Price and EPS Surprise

Huntington Ingalls Industries, Inc. Price and EPS Surprise

Huntington Ingalls Industries, Inc. price-eps-surprise | Huntington Ingalls Industries, Inc. Quote

Virgin Galactic: Astronaut membership fees associated with new ticket sales, along with the sponsorship activity of the Unity 22 space flight and revenues earned from government contracts are expected to have continued to favorably impact SPCE’s revenues in the first quarter.

However, higher employee costs, increased non-cash stock-based compensation expenses and the opening of ticket sales are expected to have hurt Virgin Galactic’s bottom line.

The company has an Earnings ESP of 0.00% and Zacks Rank 3 (read more: What's in Store for Virgin Galactic in Q1 Earnings?).

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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