We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Watch These 3 Defense Stocks for Q2 Earnings: Beat or Miss?
Read MoreHide Full Article
The second-quarter 2024 reporting cycle for aerospace-defense stocks has started on a solid note, with Lockheed Martin and Textron — two major S&P 500 members of this industry — having released better-than-expected earnings. A handful of other major industry players like L3Harris Technologies (LHX - Free Report) , Northrop Grumman (NOC - Free Report) and RTX Corp. (RTX - Free Report) are set to announce their results tomorrow.
Now, before discussing how these three defense contractors might have performed during the quarter, let’s take a look at the factors that influenced this industry.
Factors to Consider
Supply-chain challenges in the Aerospace sector, which houses all aerospace and defense stocks, have been resulting in delayed production and, therefore, deliveries of finished jets in recent times. Consequently, Airbus, a major aerospace stock, suffered a 4.2% year-over-year decline in its second-quarter 2024 commercial jet deliveries.
Boeing, too, witnessed a 32.4% decline in its commercial jet shipments due to internal problems like quality control issues for 737 Max jets, in addition to the industry-wide component shortage impact.
With Airbus and Boeing constituting the lion’s share of the global commercial aerospace market, such dismal delivery figures from them might have hurt the quarterly results of aerospace and defense stocks, particularly those engaged in commercial aviation.
Nevertheless, there remains a silver lining, with Embraer’s commercial aviation jet deliveries and Textron’s commercial turboprops deliveries having improved 171.4% and 19%, respectively, year over year in the second quarter. So, there’s still hope that the Aerospace stocks might have performed well in the April-June quarter.
Stocks that are more focused on combat are also expected to have gained as a result of consistent government support. Notably, a steady order flow observed in the past couple of quarters, along with an improving delivery trend in recent times, buoyed by recovering economic trends, is likely to have bolstered the aerospace and defense stocks’ second-quarter revenues.
However, persistent headwinds like inflationary pressure, rising jet fuel prices and increased interest expenses might have adversely impacted the industry’s bottom-line performance.
Q2 Projections
The Aerospace sector’s earnings are expected to have dropped 2.1% from the prior-year quarter’s reported figure. However, revenues are likely to have risen 2.6%.
For more details on quarterly releases, you can go through the latest Earnings Preview.
Aerospace & Defense Stocks to Watch
Let's find out how things might have shaped up for the following stocks that are scheduled to report second-quarter earnings on Jul 25:
L3Harris Technologies’ Space & Airborne Systems and the Communication Systems segments, which account for almost 62% of the company’s total revenues, are expected to record solid year-over-year sales growth in the upcoming results. This, along with revenues generated from the acquisition of Aerojet Rocketdyne, must have added an impetus to LHX’s top-line performance.
Operational improvements, favorable program performance and cost reduction initiatives are likely to have benefited earnings. However, higher interest expenses might have had some adverse impact on the company’s overall bottom-line performance (read more: Will Sales Volume Benefit L3Harris in Q2 Earnings?).
LHX currently has an Earnings ESP of -0.57% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Northrop Grumman’s business segments are likely to report a year-over-year improvement in sales, which, in turn, must have bolstered its revenue performance. However, contract termination for its restricted Space business might have had some adverse impact on its overall top-line growth.
High-interest expenses due to the company’s additional debt issuance in the first quarter might have had some adverse impact on its second-quarter earnings.
RTX Corp.’s second-quarter results are likely to reflect solid sales performance from majority of its business segments. Gains from the sale of its Cybersecurity, Intelligence and Services division are likely to have added an impetus to RTX’s earnings growth.
However, high-interest expenses, along with a charge related to the Canadian government’s imposition of sanctions, might have had some negative impact on the company’s overall bottom-line performance.
Image: Bigstock
Watch These 3 Defense Stocks for Q2 Earnings: Beat or Miss?
The second-quarter 2024 reporting cycle for aerospace-defense stocks has started on a solid note, with Lockheed Martin and Textron — two major S&P 500 members of this industry — having released better-than-expected earnings. A handful of other major industry players like L3Harris Technologies (LHX - Free Report) , Northrop Grumman (NOC - Free Report) and RTX Corp. (RTX - Free Report) are set to announce their results tomorrow.
Now, before discussing how these three defense contractors might have performed during the quarter, let’s take a look at the factors that influenced this industry.
Factors to Consider
Supply-chain challenges in the Aerospace sector, which houses all aerospace and defense stocks, have been resulting in delayed production and, therefore, deliveries of finished jets in recent times. Consequently, Airbus, a major aerospace stock, suffered a 4.2% year-over-year decline in its second-quarter 2024 commercial jet deliveries.
Boeing, too, witnessed a 32.4% decline in its commercial jet shipments due to internal problems like quality control issues for 737 Max jets, in addition to the industry-wide component shortage impact.
With Airbus and Boeing constituting the lion’s share of the global commercial aerospace market, such dismal delivery figures from them might have hurt the quarterly results of aerospace and defense stocks, particularly those engaged in commercial aviation.
Nevertheless, there remains a silver lining, with Embraer’s commercial aviation jet deliveries and Textron’s commercial turboprops deliveries having improved 171.4% and 19%, respectively, year over year in the second quarter. So, there’s still hope that the Aerospace stocks might have performed well in the April-June quarter.
Stocks that are more focused on combat are also expected to have gained as a result of consistent government support. Notably, a steady order flow observed in the past couple of quarters, along with an improving delivery trend in recent times, buoyed by recovering economic trends, is likely to have bolstered the aerospace and defense stocks’ second-quarter revenues.
However, persistent headwinds like inflationary pressure, rising jet fuel prices and increased interest expenses might have adversely impacted the industry’s bottom-line performance.
Q2 Projections
The Aerospace sector’s earnings are expected to have dropped 2.1% from the prior-year quarter’s reported figure. However, revenues are likely to have risen 2.6%.
For more details on quarterly releases, you can go through the latest Earnings Preview.
Aerospace & Defense Stocks to Watch
Let's find out how things might have shaped up for the following stocks that are scheduled to report second-quarter earnings on Jul 25:
L3Harris Technologies’ Space & Airborne Systems and the Communication Systems segments, which account for almost 62% of the company’s total revenues, are expected to record solid year-over-year sales growth in the upcoming results. This, along with revenues generated from the acquisition of Aerojet Rocketdyne, must have added an impetus to LHX’s top-line performance.
Operational improvements, favorable program performance and cost reduction initiatives are likely to have benefited earnings. However, higher interest expenses might have had some adverse impact on the company’s overall bottom-line performance (read more: Will Sales Volume Benefit L3Harris in Q2 Earnings?).
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.
LHX currently has an Earnings ESP of -0.57% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
L3Harris Technologies Inc Price and EPS Surprise
L3Harris Technologies Inc price-eps-surprise | L3Harris Technologies Inc Quote
Northrop Grumman’s business segments are likely to report a year-over-year improvement in sales, which, in turn, must have bolstered its revenue performance. However, contract termination for its restricted Space business might have had some adverse impact on its overall top-line growth.
High-interest expenses due to the company’s additional debt issuance in the first quarter might have had some adverse impact on its second-quarter earnings.
NOC currently has an Earnings ESP of +1.09% and a Zacks Rank #3 (read more: Will Segmental Sales Growth Boost Northrop's Q2 Earnings?).
Northrop Grumman Corporation Price and EPS Surprise
Northrop Grumman Corporation price-eps-surprise | Northrop Grumman Corporation Quote
RTX Corp.’s second-quarter results are likely to reflect solid sales performance from majority of its business segments. Gains from the sale of its Cybersecurity, Intelligence and Services division are likely to have added an impetus to RTX’s earnings growth.
However, high-interest expenses, along with a charge related to the Canadian government’s imposition of sanctions, might have had some negative impact on the company’s overall bottom-line performance.
RTX currently has an Earnings ESP of -1.86% and a Zacks Rank #3 (read more: Will Rising Commercial Air Traffic Aid RTX in Q2 Earnings?).
RTX Corporation Price and EPS Surprise
RTX Corporation price-eps-surprise | RTX Corporation Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.