Defense Stocks To Report Earnings On Jul 27: BA, CW, GD, NOC

We have seen Q2 results from only 26% of the defense sector’s total market cap, as of Jul 22, which of course includes a heavyweight like Lockheed Martin (NYSE:LMT) . This week is going to be crucial with other major contractors gearing up for their releases.

Lockheed Martin Corp. came up with impressive beats both on the top and the bottom line, setting an optimistic tone for the season. Backed by strong operational performances, the Pentagon’s No. 1 contractor even boosted its 2016 outlook for EPS, revenues, operating profit and cash flow. Other companies like Textron Inc. (NYSE:TXT) and Rockwell Collins Inc. (NYSE:COL) have also reported estimate-beating results.

So far, the earnings as well as revenue beat ratio has displayed a clean sheet, at 100%, shrugging off budget volatility.

The overall picture is also impressive with the sector expected to register a 9.4% increase in earnings supported by 1.5% revenue growth, as per the Earnings Trend report.

On Jul 27, three defense biggies The Boeing Co. (NYSE:BA) , General Dynamics Corp. (NYSE:GD) and Northrop Grumman Corp. (NYSE:NOC) will release their second-quarter results before the opening bell.

Let’s have a sneak peek at the developments ahead of the call.

Leading commercial aircraft manufacturer, Boeing has an Earnings ESP of +0.00% and carries a Zacks Rank #3 (Hold).

The enacted fiscal-year 2016 budget will likely aid Boeing in many of its core programs, comprising the P-8 Poseidon, the KC-46A tanker, Apache (NYSE:APA) and Chinook helicopters, GMD missile defense, commercial crew and space launch system. The company has already reported its delivery numbers for the second quarter. While commercial shipments were up 1%, defense shipments were down 19.6% year over year, displaying a mixed trend.

Boeing has also recently revealed that it will take a total of $2.05 billion in after-tax earnings charges in the second quarter in relation to three separate programs: the 787, the 747 and the KC-46 tanker aircraft program (read more: Boeing to Report Q2 Earnings: Can It Pull a Surprise?).

BOEING CO Price and EPS Surprise

BOEING CO Price and EPS Surprise | BOEING CO Quote

General Dynamics had earlier disclosed that free cash flow in 2016 will come in below net income due to its investment in Gulfstream. However, General Dynamics generates revenues from a broad portfolio of products and services that help to keep its overall growth momentum steady.

Although the company did not disclose any second-quarter guidance, it stated during the first-quarter earnings call that it expects the second quarter to be weaker than the first in the nickel category.

Still, it has an Earnings ESP of +2.17% and a Zacks Rank #2 (read more: :Will General Dynamics Beat Q2 Earnings on Jet Sales?).

GENL DYNAMICS Price and EPS Surprise

GENL DYNAMICS Price and EPS Surprise | GENL DYNAMICS Quote

Northrop Grumman has also not provided any guidance specifically for the second quarter, but it had hinted during the fourth quarter call that 2016 will be another year of strong operating performance.

The company will initiate work on some major new development programs, as it transitions from a number of legacy production programs in aerospace and electronic systems to new production programs, in aerospace emission systems. Northrop Grumman currently carries a Zacks Rank #2 and a +4.00% Earnings ESP that make a beat highly probable this quarter (read more: Is Northrop Grumman All Set for a Q2 Earnings Beat?).

NORTHROP GRUMMN Price and EPS Surprise

NORTHROP GRUMMN Price and EPS Surprise | NORTHROP GRUMMN Quote

Another company Curtiss-Wright Corporation (NYSE:CW) will report its second-quarter 2016 results tomorrow after the closing bell. Though it has a Zacks Rank #2, its Earnings ESP of -2.41% makes our prediction difficult.

The company had earlier stated that its defense unit will have a difficult comparison year over year, as in the year-ago period it registered a one-time benefit for the transition from a development to a production contract for turret drive stabilization systems. Moreover, this division will incur an approximately $2 million restructuring cost this quarter.

On the other hand, Curtiss-Wright expects its second-quarter 2016 power segment results to demonstrate strong improvement year over year.

Overall, the company continues to expect sequential improvement in its bottom line through 2016, with the first quarter being the lowest and the fourth quarter being the strongest. It expects approximately 35% of its full-year EPS to be generated in the first half of the year and the rest in the second half.

CURTISS WRIGHT Price and EPS Surprise

CURTISS WRIGHT Price and EPS Surprise | CURTISS WRIGHT Quote

Stay tuned! Do check for our full write-up on earnings releases of these stocks.

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