The S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense index have gained 1.2% in the past five trading sessions on upbeat fourth-quarter reports.
Quarterly releases from Zacks Aerospace sector like Triumph Group Inc. (NYSE:TGI) , FLIR Systems, Inc. (NASDAQ:FLIR) and Huntington Ingalls Industries, Inc. (NYSE:HII) as well as Lockheed Martin Corp.'s (NYSE:LMT) contract win were among past week's highlights.
Recap of the Past Week’s Important Stories
1. Triumph Group’s adjusted earnings from continuing operations in third-quarter fiscal 2019 (ended Dec 31, 2018) came in at 42 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents by 10.5%. Meanwhile, net revenues of $807.9 million lagged the Zacks Consensus Estimate of $822 million by 1.7% but improved 4.2% year over year.
In the quarter, the company’s operating loss of $16.9 million was narrower than $154.2 million incurred in the year-ago quarter.
As of Dec 31, 2018, Triumph Group’s cash and cash equivalents totaled $28.7 million compared with $35.8 million on Mar 31, 2018. Also, the company reaffirmed its fiscal 2019 guidance (read more: Triumph Group Q3 Earnings Beat, Revenues Lag Estimates).
2. FLIR Systems reported fourth-quarter 2018 adjusted earnings of 62 cents per share, which exceeded the Zacks Consensus Estimate of 60 cents by 3.3%. The company’s revenues declined 9.4% year over year to $448.5 million.
Adjusted operating income came in at $107.9 million compared with $111.7 million in the prior-year quarter, reflecting a 3.4% decline.
At the end of 2018, the company’s cash flow generated from operating activities amounted to $374.2 million, up 21.3% from the prior-year tally of $308.3 million. The company projects adjusted earnings per share in the range of $2.30-$2.36 on revenues of $1.92-$1.95 billion (read more: FLIR Systems Q4 Earnings Beat Estimates, Improve Y/Y).
3. Huntington Ingalls' fourth-quarter 2018 earnings of $4.94 per share surpassed the Zacks Consensus Estimate of $4.45 by 11%. The company’s total revenues came in at $2.20 billion exceeding the Zacks Consensus Estimate of $2.06 billion by 6.9%.
Moreover, Huntington Ingalls received new orders worth $3.3 billion in the fourth quarter. As a result, the company’s total backlog reached $23 billion as of Dec 31, 2018.
Its cash from operating activities, at the end of 2018, grossed $914 million compared with $814 million at the end of 2017 (read more: Huntington Ingalls Q4 Earnings Top, Revenues Up Y/Y).
4. Lockheed Martin’s Aeronautics business won a $90.3-million modification contract to identify and execute cost reduction initiatives for the overall cost reduction of the F-35 Lightning II Air System. Work related to this project will be performed in Fort Worth, TX, and is expected to be completed by June 2022.
Per a report by Avionics International, for the F-35A program, Lockheed Martin intends to implement strategic cost reduction initiatives to bring down the unit price to $80 million by 2023 (read more: Lockheed Martin Wins $90M Navy Deal to Support F-35 Program).
Performance
Over the trailing five trading sessions, the defense biggies put up a solid show, except General Dynamics (NYSE:GD). L3 Technologies gained the most with 3.2% increase in share price, followed by Raytheon (NYSE:RTN).
However, the industry's performance over the last six months has been mostly disappointing. This time Textron (NYSE:TXT) lost the most with its shares plunging more than 18%. Nevertheless, shares of Boeing (NYSE:BA) gained a solid 23.5%.
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 | 0.18% | -5.52% |
BA | 1.15% | 23.53% |
GD | -0.86% | -11.12% |
RTN | 2.87% | -8.32% |
NOC | 0.74% | -4.51% |
TXT | 1.75% | -18.22% |
LLL | 3.18% | -0.39% |
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