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Defense Stock Roundup: LMT, BA, GD Win Deals, AIR Misses on Q2 Earnings
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Majority of the U.S. defense stocks received a generous flow of funds from the Pentagon, over the trailing five trading sessions. Consequently, major indices in the Aerospace-Defense industry ended in the green. Evidently, the S&P 500 Aerospace & Defense (Industry) index inched up 0.2% over the said time frame, while the Dow Jones U.S. Aerospace & Defense index saw an uptick of 0.3%.
Among the last week’s highlights, defense majors Lockheed Martin Corp. (LMT - Free Report) , The Boeing Company (BA - Free Report) and General Dynamics Corp. (GD - Free Report) secured a number of notable orders from the Department of Defense’s daily funding session. Meanwhile AAR Corp. (AIR - Free Report) reported fiscal second-quarter 2018 earnings.
Recap of Last Week’s Key Stories
1. Lockheed Martin’s Aeronautics business division secured a contract worth $7 billion for offering comprehensive F-22 air vehicle sustainment. Work related to this deal is scheduled to get over by Dec 31, 2027.
The contract was awarded by the Air Force Life Cycle Management Center, Hill Air Force Base, UH. The deal includes five-year base ordering period. Fiscal 2018 operations and maintenance funds will be used to partially finance the task.
Work will be performed at five operational bases and six support locations situated across various parts of the United States as well as overseas locations, combat deployment and enroute support bases, potential locations through depot partnering agreements, and system program office locations (read more:Lockheed Martin to Provide F-22 Sustainment Services for $7B).
Meanwhile the company won a modification contract worth $945million for exercising production option of fiscal 2018 Patriot Advanced Capability-3 (PAC-3) missiles. The deal includes 54 U.S. Missile Segment Enhancement (MSE) missiles, 24 Qatar MSE missiles, 130 Kingdom of Saudi Arabia Cost Reduction Initiative (CRI) missiles and other associated ground support equipment.
The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Work will be carried out in Grand Prairie and Lufkin, TX, Camden, AZ, Chelmsford, MA, Ocala, FL, Huntsville, AL and Huntington Beach, CA.
Lockheed Martin will utilize fiscal 2010, 2016, 2017 and 2018 other procurement (Army) funds to complete the task. Work related to the deal is scheduled to be completed by Jan 31, 2021 (read more: Lockheed Martin Wins $945M Contract for PAC-3 Missiles).
2. Boeing’s business division, Defense, Space & Security, clinched a foreign military sales (FMS) contract worth $6.2 billion. Per the terms of the deal, the company will procure 36 new F-15QA aircraft that will be provided to the Qatar Emiri Air Force.
The contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH and is scheduled to be over by Dec 30, 2022. FMS funds will be utilized to partially finance the work, which will be executed in St. Louis, MI (read more: Boeing Wins $6B Deal to Supply F-15 Jets to Qatar Air Force).
The company won a modification contract worth $1.2 billion for the manufacture and delivery of 10 full-rate production P-8A aircraft from the 9th Lot. Of the 10 jets, seven will be provided to the U.S. Navy and three to the UK government. The contract will also offer Lot 9 segregable efforts, which include unknown obsolescence, class I change assessments and obsolescence monitoring.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the work will be carried out in Seattle, WA, while the rest will be executed at various other locations across the U.S. and Cambridge, U.K.
Boeing will utilize fiscal 2018 aircraft procurement (Navy) and FMS funds to complete the task. Work related to the deal is scheduled to be over by December 2020 (read more: Boeing Secures $1.2B Deal for Manufacturing P-8A Aircraft).
3. General Dynamics’ Land Systems business unit secured a contract worth $2.6 billion to upgrade 786 M1A1 configured Abrams vehicles for the newly configured M1A2 System Enhancement Package Version 3. The deal also entitles the company to upgrade M1A1 vehicles to M1A12S and M1A2-K vehicles. Work related to the agreement is scheduled to be over by Dec 21, 2020.
The contract was awarded by the U.S. Army Contracting Command, Warren, MI. Work locations and funding related to the deal will be determined with each order(read more: General Dynamics Wins $2.6B Deal to Upgrade M1A1 Tanks).
4. AAR Corp reported second-quarter fiscal 2018 earnings of 35 cents per share, which missed the Zacks Consensus Estimate of 37 cents by 5.4. The bottom line remained in line with the year-ago figure.
Net sales came in at $449.7 million in the fiscal second quarter, which also missed the Zacks Consensus Estimate of $454 million by 1%. However, revenues increased 6.1% from $423.8 million in the year-ago quarter.
Over the last five trading sessions, the defense biggies put up a mixed show, with a few companies like Boeing, Northrop Grumman and Textron suffering a decline in share price. However, others gained in the last five days. L3 Technologies, Inc. gained the most with its share price gaining 2.1% in this period.
Over the last six months, the entire industry has put up a stellar performance. Keeping up with its usual trend, Boeing gained the most, with its shares gaining 48.1%, followed by Rockwell Collins.
The following table shows the price movement of the major defense players over the past five trading days and during the last six months.
Company
Last Week
Last 6 Months
LMT
0.48%
14.98%
BA
-0.79%
48.09%
GD
0.66%
0.94%
RTN
0.66%
16.60%
NOC
-0.13%
19.91%
COL
0.19%
30.02%
TXT
-0.07%
22.65%
LLL
2.12%
19.36%
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Defense Stock Roundup: LMT, BA, GD Win Deals, AIR Misses on Q2 Earnings
Majority of the U.S. defense stocks received a generous flow of funds from the Pentagon, over the trailing five trading sessions. Consequently, major indices in the Aerospace-Defense industry ended in the green. Evidently, the S&P 500 Aerospace & Defense (Industry) index inched up 0.2% over the said time frame, while the Dow Jones U.S. Aerospace & Defense index saw an uptick of 0.3%.
Among the last week’s highlights, defense majors Lockheed Martin Corp. (LMT - Free Report) , The Boeing Company (BA - Free Report) and General Dynamics Corp. (GD - Free Report) secured a number of notable orders from the Department of Defense’s daily funding session. Meanwhile AAR Corp. (AIR - Free Report) reported fiscal second-quarter 2018 earnings.
Recap of Last Week’s Key Stories
1. Lockheed Martin’s Aeronautics business division secured a contract worth $7 billion for offering comprehensive F-22 air vehicle sustainment. Work related to this deal is scheduled to get over by Dec 31, 2027.
The contract was awarded by the Air Force Life Cycle Management Center, Hill Air Force Base, UH. The deal includes five-year base ordering period. Fiscal 2018 operations and maintenance funds will be used to partially finance the task.
Work will be performed at five operational bases and six support locations situated across various parts of the United States as well as overseas locations, combat deployment and enroute support bases, potential locations through depot partnering agreements, and system program office locations (read more:Lockheed Martin to Provide F-22 Sustainment Services for $7B).
Meanwhile the company won a modification contract worth $945million for exercising production option of fiscal 2018 Patriot Advanced Capability-3 (PAC-3) missiles. The deal includes 54 U.S. Missile Segment Enhancement (MSE) missiles, 24 Qatar MSE missiles, 130 Kingdom of Saudi Arabia Cost Reduction Initiative (CRI) missiles and other associated ground support equipment.
The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Work will be carried out in Grand Prairie and Lufkin, TX, Camden, AZ, Chelmsford, MA, Ocala, FL, Huntsville, AL and Huntington Beach, CA.
Lockheed Martin will utilize fiscal 2010, 2016, 2017 and 2018 other procurement (Army) funds to complete the task. Work related to the deal is scheduled to be completed by Jan 31, 2021 (read more: Lockheed Martin Wins $945M Contract for PAC-3 Missiles).
2. Boeing’s business division, Defense, Space & Security, clinched a foreign military sales (FMS) contract worth $6.2 billion. Per the terms of the deal, the company will procure 36 new F-15QA aircraft that will be provided to the Qatar Emiri Air Force.
The contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH and is scheduled to be over by Dec 30, 2022. FMS funds will be utilized to partially finance the work, which will be executed in St. Louis, MI (read more: Boeing Wins $6B Deal to Supply F-15 Jets to Qatar Air Force).
The company won a modification contract worth $1.2 billion for the manufacture and delivery of 10 full-rate production P-8A aircraft from the 9th Lot. Of the 10 jets, seven will be provided to the U.S. Navy and three to the UK government. The contract will also offer Lot 9 segregable efforts, which include unknown obsolescence, class I change assessments and obsolescence monitoring.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the work will be carried out in Seattle, WA, while the rest will be executed at various other locations across the U.S. and Cambridge, U.K.
Boeing will utilize fiscal 2018 aircraft procurement (Navy) and FMS funds to complete the task. Work related to the deal is scheduled to be over by December 2020 (read more: Boeing Secures $1.2B Deal for Manufacturing P-8A Aircraft).
3. General Dynamics’ Land Systems business unit secured a contract worth $2.6 billion to upgrade 786 M1A1 configured Abrams vehicles for the newly configured M1A2 System Enhancement Package Version 3. The deal also entitles the company to upgrade M1A1 vehicles to M1A12S and M1A2-K vehicles. Work related to the agreement is scheduled to be over by Dec 21, 2020.
The contract was awarded by the U.S. Army Contracting Command, Warren, MI. Work locations and funding related to the deal will be determined with each order (read more: General Dynamics Wins $2.6B Deal to Upgrade M1A1 Tanks).
4. AAR Corp reported second-quarter fiscal 2018 earnings of 35 cents per share, which missed the Zacks Consensus Estimate of 37 cents by 5.4. The bottom line remained in line with the year-ago figure.
Net sales came in at $449.7 million in the fiscal second quarter, which also missed the Zacks Consensus Estimate of $454 million by 1%. However, revenues increased 6.1% from $423.8 million in the year-ago quarter.
During the reported quarter, the company paid dividends of $2.6 million or 7.5 cents per share (read more: AAR Corp Misses Earnings and Revenue Estimates in Q2).
Performance
Over the last five trading sessions, the defense biggies put up a mixed show, with a few companies like Boeing, Northrop Grumman and Textron suffering a decline in share price. However, others gained in the last five days. L3 Technologies, Inc. gained the most with its share price gaining 2.1% in this period.
Over the last six months, the entire industry has put up a stellar performance. Keeping up with its usual trend, Boeing gained the most, with its shares gaining 48.1%, followed by Rockwell Collins.
The following table shows the price movement of the major defense players over the past five trading days and during the last six months.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>