The Q4 earnings season is in full swing, with almost 26% of S&P 500 companies having released their quarterly results. As of Jan 24, of the 89 S&P 500 members which revealed their earnings numbers, 80.9% delivered an earnings beat, while 74.2% surpassed revenue estimates.
Coming to the broader Aerospace sector's performance, 9.1% of the defense stocks released earnings as of Jan 24, with an earnings beat ratio of 100% on 0.5% sales growth.
The impressive earnings results got reflected in the defense stock's performance over the last five trading sessions. Major indices of the Aerospace-Defense space - the S&P 500 Aerospace & Defense (Industry) index rose 3.4%, while the Dow Jones U.S. Aerospace & Defense index grew 3.3% - during this period.
Among last week's highlights, defense primes, General Dynamics Corp.GD , Northrop Grumman Corp.NOC , Raytheon Co.RTN , L3 Technologies, Inc.LLL , Rockwell Collins Inc.COL , United Technologies Corp.UTX and Honeywell International Inc.HON have released their quarterly figures.
Recap of Last Week's Key Stories
1. General Dynamics' fourth-quarter 2017 earnings from continuing operations of $2.50 per share surpassed the Zacks Consensus Estimate of $2.37 by 5.5%. Reported earnings were up 6.8% from $2.36 recorded in the year-ago quarter.
However, the company's total revenues of $8,277 million missed the Zacks Consensus Estimate of $8,437 million by 1.9%. Nevertheless, revenues were up 8.2% from $7,654 million in the year-ago quarter.
As of Dec 31, 2017, General Dynamics' cash and cash equivalents were $2,983 million compared with $2,334 million as of Dec 31, 2016. The company's cash flow from operating activities was $3,879 million for 2017 compared with $2,198 million in 2016 (read more: General Dynamics Beats Q4 Earnings, Revenues Up Y/Y ).
2. Raytheon's fourth-quarter 2017 adjusted earnings from continuing operations of $2.03 per share exceeded the Zacks Consensus Estimate of $2.02 by 0.5%.
The company's reported earnings of $1.35 per share came in below the prior-year quarter's equivalent of $1.88, owing to the Tax Cuts and Job Acts of 2017, which had an unfavorable impact of 59 cents on earnings.
The company's fourth-quarter revenues of $6,783 million witnessed 8% year-over-year growth, which however missed the Zacks Consensus Estimate of $6,833.7 million by 0.7%.Total backlog at the end of 2017 was $38.2 billion, compared with $36.7 billion at the end of 2016.
Raytheon ended 2017 with cash and cash equivalents of $3,103 million, down from $3,303 million as of Dec 31, 2016 (read more: Raytheon Beats on Q4 Earnings, Issues '18 Outlook ) .
3. L3 Technologies' fourth-quarter 2017 adjusted earnings of $2.35 per share from continuing operations topped the Zacks Consensus Estimate of $2.30 by 2.2%. The company reported earnings of $3.34, higher than the prior-year quarter's equivalent of $2.32, led by a tax benefit of 99 cents.
Total revenues of $2.57 billion in the quarter beat the Zacks Consensus Estimate of $2.55 billion by 1.1%. However, the top line was down 3% year over year. Its funded backlog was $9 billion as of Dec 31, 2017, up 6% from $8.4 billion as of Dec 31, 2016.
As of Dec 31, 2017, L3 Technologies had $662 million in cash and cash equivalents compared with $363 million as of Dec 31, 2016. L3 Technologies raised its 2018 earnings outlook. The company now expects earnings in the range of $9.30-$9.50 per share (read more: L3 Technologies Q4 Earnings Top, Raises '18 EPS View ).
4. Northrop Grumman's fourth-quarter 2017 earnings of $2.82 per share surpassed the Zacks Consensus Estimate of $2.75 by 2.5%. Reported earnings were $1.01, down nearly 65.9% year over year, due to higher tax expenses resulting from the enactment of the Tax Cuts and Jobs Act.
Its total revenues of $6.63 billion also surpassed the Zacks Consensus Estimate of $6.37 billion by 4.1%. Total backlog at the end of 2017 was $42.9 billion, down 5.5% from the year-ago period.
Northrop Grumman's cash and cash equivalents as of Dec 31, 2017 were $12.2 billion, up from $2.54 billion as of Dec 31, 2016. The company expects to generate earnings in the range of $15.00-$15.25 per share (read more: Northrop Grumman Beats Q4 Earnings & Revenue Estimates ).
5. Rockwell Collins' adjusted earnings per share of $1.59 beat the Zacks Consensus Estimate of $1.53 by 3.9%, during first-quarter fiscal 2018. Reported earnings grew 30.3% from $1.22 a year ago.
The company's total sales were $2,011 million, which topped the Zacks Consensus Estimate of $1,988 million by 1.2%.
As of Dec 31, 2017, Rockwell Collins' cash and cash equivalents were $583 million compared with $703 million as of Sep 30, 2017. Cash used for operating activities at the end of the quarter was $259 million, compared with 101 million in the prior-year quarter (read more: Rockwell Collins Beats on Q1 Earnings, Sales Up Y/Y ).
6. Excluding restructuring and other non-recurring items, United Technologies' adjusted earnings for the fourth quarter2017 were $1.60 per share, which beat the Zacks Consensus Estimate of $1.56.
Net sales in the reported quarter came in at $15,680 million compared with $14,659 million in the year-ago quarter.Quarterly sales exceeded the Zacks Consensus Estimate of $15,400 million.
United Technologies exited 2017 with cash and cash equivalents of $8,985 million compared with $7,157 million of the previous year. For 2017, the company generated net cash of $5,631 million from its operating activities, down from $6,412 million recorded in the year-ago period read more: United Technologies Q4 Earnings Beat, 2018 View Solid ).
7. Excluding non-recurring items, Honeywell's adjusted earnings for the fourth quarter2017 were $1.85 per share compared with $1.74 in the year-earlier quarter. Adjusted earnings for the quarter beat the Zacks Consensus Estimate by a penny.
The company's quarterly revenues grew 8.6% year over year to $10,843 million and exceeded the Zacks Consensus Estimate of $10,689 million. Total segment profit for the quarter was $2,096 million compared with $1,899 million in the prior-year period, with respective segment profit margins of 19.3% and 19%.
Net cash provided from operating activities for 2017 was $5,966 million compared with $5,498 million in 2016.Honeywell revised full-year 2018 earnings guidance to better reflect the favorable impact from the tax reform (read more :Honeywell Beats Q4 Earnings on Organic Growth, View Up ).
Over the last five trading sessions, the defense biggies put up a solid show. General Dynamics gained the most with its share price gaining 8.7% in this period, followed by Raytheon.
Over the last six months, the entire industry has once again put up a stellar performance. Keeping up with its usual trend, Boeing gained the most, with its shares gaining 41.6%, followed by Northrop Grumman.
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|
What's Next in This Space?
Harris Corp. is set to release fiscal second-quarter 2018 results on Jan 30.
Boeing and Textron are set to release fourth-quarter 2017 results before the market opens on Jan 31.
Spirit AeroSystems is scheduled to report fourth-quarter earnings on Feb 2 before the market opens.
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