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Defense Stocks Earnings Slated for Jul 28: RTN, LLL, TGI, LDOS

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Last week, we saw sector behemoth Lockheed Martin Corp. LMT reporting quarterly numbers, kick-starting the second-quarter earnings cycle at the defense sector. Following its suit, a few other companies like Textron Inc. TXT and Rockwell Collins Inc. COL also came up with second-quarter results.

As of Jul 22, 32.7% of the market cap of the S&P 500 index had released earnings. Reported results reveal a 1.1% decline in earnings in spite of 2.6% higher revenues. Overall earnings are anticipated to record a 3.4% decline on 0.5% lower revenues, with 9 of the 16 Zacks sectors hovering in the negative territory. The picture should become clearer by the end of this week, as nearly 189 of the index members have their earnings releases lined up.

The aerospace and defense sector, however, appears to be looking up, which is much better than the overall Q2 forecast. Sector earnings are likely to improve 9.4% on a 1.5% increase in revenues. For more details on quarterly releases, you can go through our Earnings Trends report.

By last Friday, 26% of the total market cap of the defense sector had come up with quarterly performances. For these companies, overall earnings witnessed a 9.2% rise on 10.3% higher revenues.

Let's take a look at four defense companies - Raytheon CompanyRTN , L-3 Communications Holdings Inc.LLL , Triumph Group, Inc.TGI and Leidos Holdings, Inc.LDOS - that are all scheduled to release quarterly results before the opening bell on Jul 28.

Missile manufacturer Raytheon has an Earnings ESP of +8.82% and a Zacks Rank #3 (Hold).

The company expects to start witnessing an improvement in its missile business from the second quarter, which will continue through the rest of the year. Management stated that the Integrated Defense Systems ("IDS") division, which includes Patriot, will likely post impressive margins in the to-be-reported quarter as international Patriot programs continue to ramp up. On its first-quarter earnings call, Raytheon raised its adjusted earnings forecast for 2016 by 13 cents per share, accounting for a tax benefit from a new accounting standard for stock compensation. This is expected to reduce its effective tax rate for the whole year. (Read more: Can Raytheon Keep the Earnings Streak Alive in Q2? )

RAYTHEON CO Price and EPS Surprise

RAYTHEON CO Price and EPS Surprise | RAYTHEON CO Quote

During the first-quarter earnings call, L-3 Communications ' management stated that quarterly earnings were driven extensively by market share gains in core areas, which will continue to do so throughout 2016. Keeping with this, management raised its adjusted earnings per share guidance to the range of $7.55 to $7.75 from the prior projection of $7.40-$7.60.

However, the company believes that the final sales surplus from the troop drawdown from Afghanistan would dent revenues by about $135 million in 2016, excluding which, sales to the U.S. government and DoD markets would have been more or less flat. (Read more: L-3 Communications Q2 Earnings: What's in Store? )

The company has an Earnings ESP of -1.19% and a Zacks Rank #3.

L-3 COMM HLDGS Price and EPS Surprise

L-3 COMM HLDGS Price and EPS Surprise | L-3 COMM HLDGS Quote

Triumph Group is scheduled to report first-quarter fiscal 2017 results.

On its fiscal fourth-quarter 2016 earnings call, the company had announced its plan to streamline its business units from six to four to reduce costs and better support the "go-to-market strategies." This restructuring initiative will be effective from the first quarter of 2017, and its effects and costs will be recorded in the to-be reported quarter. The company said that it expects the first half of the year to be considerably weak due to transformation efforts and cost reduction initiatives.

Triumph Group has an Earnings ESP of -6.25% and a Zacks Rank #4 (Sell), which does not conclusively point toward a likely earnings beat this quarter.

TRIUMPH GRP INC Price and EPS Surprise

TRIUMPH GRP INC Price and EPS Surprise | TRIUMPH GRP INC Quote

Leidos ' consistent investments in internal research and development allow it to stay at the forefront of technological innovation in its key addressable markets. The company also enjoys a continuous flow of contracts from the U.S. DoD. During the second quarter, it has bagged a number of contracts, which should propel its top line.

The company has an Earnings ESP of +0.00% and a Zacks Rank #4 (Sell), which does not conclusively indicate that the company will be able to beat earnings in the to-be-reported quarter.

LEIDOS HOLDINGS Price and EPS Surprise

LEIDOS HOLDINGS Price and EPS Surprise | LEIDOS HOLDINGS Quote

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

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LOCKHEED MARTIN (LMT): Free Stock Analysis Report

ROCKWELL COLLIN (COL): Free Stock Analysis Report

TRIUMPH GRP INC (TGI): Free Stock Analysis Report

TEXTRON INC (TXT): Free Stock Analysis Report

RAYTHEON CO (RTN): Free Stock Analysis Report

L-3 COMM HLDGS (LLL): Free Stock Analysis Report

LEIDOS HOLDINGS (LDOS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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