The fourth-quarter 2016 reporting cycle has so far seen the best performance in the last five quarters. Not only is growth on track to be the highest in two years, total earnings for the quarter are set to hit a new quarterly high.
As per our latest Earnings Preview report, 275 S&P 500 members (constituting 70.2% of the total market cap) have posted their quarterly numbers as of Feb 3. With the majority of the companies having released their quarterly reports, total earnings for these members have gone up 6.9% on 4.2% higher revenues.
Coming to Aerospace and Defense securities, companies in this sector have been performing fairly well in recent times, especially after Donald Trump won the election. Notably 80% of the companies in this space have released their Q4 results, with 87.5% beating earnings estimates and 37.5% surpassing the revenue mark.
Although the quarterly performance of stocks in this space like Spirit AeroSystems Holdings, Inc. SPR , Textron Inc. TXT and Triumph Group, Inc. TGI has not been satisfactory, the overall earnings picture for this sector is quite bright. Notably, majority of the defense biggies like Lockheed Martin, Boeing, General Dynamics and Raytheon posted better-than-expected earnings results.
What's in Store?
With 84 S&P 500 members set to report their quarterly numbers this week, Q4 results from 71.8% of the index's total membership will be out by the end of the week.
Overall, Q4 earnings from the Aerospace and Defense sector are expected to improve 13.3% year over year on 1.4% higher revenues. Meanwhile, earnings from the broader S&P 500 member cohort are expected to be up 6% year over year on 3.7% higher revenues.
Let's take a look at three defense companies - TransDigm Group Incorporated TDG , B/E Aerospace, Inc. BEAV and Wesco Aircraft Holdings, Inc. WAIR - that are about to release their quarterly results on Feb 7.
TransDigm , a producer and supplier of highly engineered proprietary aerospace components and certain systems/subsystems, will report its first-quarter fiscal 2017 results, before the opening bell. The company posted a positive earnings surprise of 0.98% in the preceding quarter.
However, our proven model does not conclusively show that TransDigm is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
TransDigm carries a Zacks Rank #4. Also, the company has an Earnings ESP of -0.44% because the Most Accurate estimate is pegged at $2.26, below the Zacks Consensus Estimate of $2.27 (read more: TransDigm Q1 Earnings: A Disappointment in Store? ).
Transdigm Group Incorporated Price and EPS Surprise
B/E Aerospace , manufacturer of aircraft cabin interior products, is slated to release its fourth-quarter 2016 results. The company, a Zacks Rank #3 stock, posted an earnings surprise of 3.75% last quarter. You can see the complete list of today's Zacks #1 Rank stocks here .
The company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 80 cents.
B/E Aerospace, Inc. Price and EPS Surprise
Wesco Aircraft , a distributor of aerospace bearing products and provider of supply chain management services to the aerospace industry, will be reporting its first-quarter fiscal 2017 results. The company, another Zacks Rank #4 stock, posted an earnings surprise of 0.00% last quarter.
The company has an Earnings ESP of -3.65% as the Most Accurate estimate is pegged at 25 cents, below the Zacks Consensus Estimate of 26 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Wesco Aircraft Holdings, Inc. Price and EPS Surprise
Stay tuned! Check later for our full write-up on earnings releases of these stocks.
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