Defense Stock Roundup: Q1 Earnings Beat at LDOS, AJRD, LLL & SPR
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, Arerojet Rocketdyne Holdings, Inc. AJRD, L3 Technologies Inc. LLL, Spirit AeroSystems Holdings, Inc. SPR, Huntington Ingalls Industries Inc. HII and Harris Corp. HRS 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.
| Company | Last Week | Last 6 Months |
| LMT | 1.60% | 10.18% |
| BA | -0.51% | 4.00% |
| GD | -1.47% | 0.46% |
| RTN | 2.19% | 0.40% |
| NOC | 3.15% | 4.51% |
| TXT | -0.56% | -2.79% |
| LLL | 6.81% | 20.48% |
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.â€
Click to get it free
>>