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Defense Stock Roundup: Q1 Earnings Beat at LDOS, AJRD, LLL & SPR

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The U.S. Aerospace and Defense industry’s performance in the past week has been impressive. Notably, the major indices like the S&P 500 Aerospace &Defense (Industry) and the Dow Jones U.S. Aerospace & Defense index inched up 0.6% in the trailing five trading sessions.

Among the past week’s highlights, quarterly results from a number of Aerospace-Defense majors namely Leidos Holdings Inc. (LDOS - Free Report) , Arerojet Rocketdyne Holdings, Inc. (AJRD - Free Report) , L3 Technologies Inc. (LLL - Free Report) , Spirit AeroSystems Holdings, Inc. (SPR - Free Report) , Huntington Ingalls Industries Inc. (HII - Free Report) and Harris Corp. (HRS - Free Report) remained a key area of investors’ focus.

Recap of Last Week’s Important Stories

1.    Leidos Holdings’ first-quarter 2019 adjusted earnings of $1.13 per share surpassed the Zacks Consensus Estimate by 14.1%. The company generated total revenues of $2,577 million, which exceeded the Zacks Consensus Estimate by 2.3%.

At the end of the reported quarter, the company’s total backlog totaled $21.5 billion compared with $20.8 billion at 2018 end. Of this total backlog, $6.1 billion was funded.

Net cash provided by operating activities was $288 million compared with $22 million a year ago. These apart, Leidos Holdings partially revised its outlook for 2019 (read more: Leidos Holdings' Q1 Earnings Top, 2019 EPS View Up).

2.    Aerojet Rocketdyne reported first-quarter 2019 adjusted earnings of 44 cents per share, which surpassed the Zacks Consensus Estimate by 41.9%. Its revenues of $491.7 million exceeded the consensus mark by 0.9%.

Aerojet Rocketdyne’s total backlog at the end of first quarter 2019 totaled $3.8 billion, lower than $4.1 billion registered at the end of 2018.Operating cash outflow from continuing operations summed $17.7 million as of Mar 31, 2019, compared with cash outflow of $95.4 million in the year-ago period.

Its operating income of $63.3 million improved a solid 59.8% year over year (read more: Aerojet Rocketdyne's Q1 Earnings Beat, Improve Y/Y).

3.    L3 Technologies’ first-quarter 2019 adjusted earnings of $2.89 per share from continuing operations outpaced the Zacks Consensus Estimate by 14.7%. Its total sales came in at $2.70 billion, exceeding the Zacks Consensus Estimate by 7%.

Funded orders in the first quarter totaled $3.38 billion, reflecting a 28% surge from the year-ago quarter. Operating margin expanded 90 basis points (bps) to 11.5%.

Net cash inflow from operating activities totaled $174 million at the end of the first quarter compared to the year-ago cash outflow of $35 million. The company has revised its guidance for 2019 (read more: L3 Technologies' Q1 Earnings Beat, 2019 Sales View Up).

4.    Spirit AeroSystems’ first-quarter 2019 adjusted earnings of $1.68 per share surpassed the Zacks Consensus Estimate of $1.67. Total revenues came in at $1,968 million exceeding the Zacks Consensus Estimate of $1,940 million.

Backlog at the end of first-quarter 2019 was $48 billion, in line with the prior-quarter’s number.

As of Mar 28, 2019, Spirit AeroSystems had $1,228.4 million in cash and cash equivalents compared with $773.6 million as on Dec 31, 2018.Cash flow from operating activities increased to $242.2 million at the end of first-quarter 2019 from $166.6 million at the end of first-quarter 2018 (read more: Spirit AeroSystems Q1 Earnings Beat, Revenues Up Y/Y).

5.    Huntington Ingalls’ first-quarter 2019 earnings of $2.85 per share missed the Zacks Consensus Estimate by 12.8%. However, revenues came in at $2.08 billion, exceeding the Zacks Consensus Estimate by 7.3%.

Huntington Ingalls received new orders worth $19.6 billion in the first quarter. As a result, the company’s total backlog reached $41 billion as of Mar 31, 2019, compared with $23 billion as of Dec 31, 2018.

The company’s cash from operating activities, at the end of the first quarter 2019, grossed $11 million compared with $120 million at the end of first quarter 2018 (read more: Huntington Ingalls Q1 Earnings Lag Estimates, Down Y/Y).

6.    Harris Corp’s third-quarter fiscal 2019 earnings improved 30.2% year over year to $2.11 per share, beating the Zacks Consensus Estimate of $2.04. Also, its quarterly revenues of $1,728 million from product sales and services surpassed the Zacks Consensus Estimate of $1,703 million.

During the first nine months of fiscal 2019, Harris generated $874 million of net cash from operating activities compared with $230 million in the year-ago period. Harris returned $444 million to its shareholders through dividends and share repurchases in the same time period.

Backed by strong third-quarter and year-to-date performance, Harris raised its guidance for fiscal 2019 (read more: Harris Q3 Earnings & Revenues Beat, FY19 View Up).

Performance

Over the past five trading sessions, the defense biggies put up a mixed show. While shares of Lockheed Martin, Raytheon and L3 Technologies gained, that of Boeing, General Dynamics and Textron lost.

Over the last six months, however, the industry's performance has been impressive except for Textron. L3 Technologies gained the most with 20% rise in its share price, followed by Lockheed Martin.

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

CompanyLast WeekLast 6 Months
LMT1.60%10.18%
BA-0.51%4.00%
GD-1.47%0.46%
RTN2.19%0.40%
NOC3.15%4.51%
TXT-0.56%-2.79%
LLL6.81%20.48%


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