L3Harris Technologies rounded out a big week for defense stocks earnings, with a mixed report early Friday.
Northrop Grumman topped first-quarter earnings views early Thursday but revenue just missed. That follows strong General Dynamics earnings Wednesday and Raytheon Technologies delivering mixed results Tuesday and cut its revenue outlook. General Dynamics stock rose near a buy point.
All four defense stocks are trading near buy points within short bases.
L3Harris Technologies Earnings
Estimates: Analysts forecast a 4% decline in L3Harris Technologies earnings to $3.05 per share. Revenue was seen sliding 9% to $4.142 billion.
Results: Earnings fell 2% to $3.12 a share, beating views. Revenue dipped 5% to $4.103 billion, a slight miss.
Outlook: L3Harris Technologies maintained guidance for EPS of $13.35-$13.65 and revenue of $17.3 billion-$17.7 billion. That compares to FactSet analyst consensus of EPS of $13.60, up 5% year over year, and revenue of $17.573 billion, down 1.4%.
L3Harris Stock
Shares of L3Harris wererose 0.9% to 241.24 Friday. On Thursday, the stock gave up 0.8% to 239.09, leaning further below the 50-day average. For now, L3Harris stock remains well below a 279.81 buy point from a short pattern on top of a longer consolidation. The RS line for LHX stock remains not far off highs.
Northrop Grumman Earnings
Estimates: Northrop Grumman was seen posting a 9% EPS decline to $5.96 on a 3% sales decline to $8.877 billion.
Results: Northrop earnings fell 7% to $6.10 a share while revenue declined 4% to $8.797 billion.
Outlook: Northrop reaffirmed EPS guidance for $24.50-$25.10, roughly in line. It now sees full-year revenue of $36.2 billion-$36.6 billion, largely below views.
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Northrop Grumman Stock
NOC stock rose 0.6% to 446.91, after reclaiming its 50-day line Thursday. Northrop Grumman stock successfully broke out after the Russian invasion and has now formed a new base. NOC stock is working on a 477.36 buy point from a cup-with-handle base above longer consolidations.
As the B-21 Raider bomber jet production ramps up, the U.S. Air Force on April 7 awarded Northrop Grumman a $108 million contract to buy needed parts in advance.
General Dynamics Earnings
Estimates: Analysts polled by FactSet expected to see a 1% EPS uptick to $2.51 despite a 4% sales drop to $8.996 billion.
Results: General Dynamics earnings rose 5% to $2.61 a share with revenue just edging higher to $9.392 billion. The company cited strong demand for Gulfstream jets. That helped aerospace backlog rise 8% to $17.6 billion, growing for a fifth straight quarter of gains and reaching the highest level in a decade.
In addition to Abrams tanks and Stryker combat vehicles, defense firm General Dynamics makes Gulfstream jets for private business customers.
Boeing also reported early Wednesday, with a wider-than-expected loss and falling short on revenue. BA stock tumbled.
General Dynamics Stock
Shares fell 0.4% to 240.37 Friday, above the 50-day average. GD stock rose Wednesday on earnings, bouncing from around its 50-day line but closing off intraday highs. General Dynamics stock has a 255.09 buy point from a flat base, with its RS line rising to just below early March highs. GD stock has a strong IBD Composite Rating of 88 out of 99.
Raytheon Earnings
Estimates: Analysts forecast Raytheon Technologies earnings to rebound 13% to $1.01 per share on a 4% sales bounce to $15.798 billion.
Results: On Tuesday, Raytheon disclosed that earnings rose 28% to $1.15 a share while revenue advanced 3% to $15.72 billion. Sales rose 10% year over year at the Collins Aerospace unit and 12% at Pratt & Whitney. It fell 5% at Raytheon Intelligence & Space and 7% at Raytheon Missiles & Defense.
Outlook: For the full year, Raytheon now sees revenue of $67.75 billion-$68.75 billion, down from $68.5 billion-$69.5 billion. It reaffirmed EPS guidance of $4.60-$4.80. At the midpoint, the updated earnings and sales guidance are both slightly below FactSet analyst consensus.
Global sanctions on Russia drove the sales cut, Raytheon Technologies said in Tuesday's release. Raytheon CFO Neil Mitchill later told Reuters that the revenue cut "was strictly related to direct and indirect sales that are no longer allowed because of the global sanctions imposed on Russia."
About three quarters of that lost $750 million revenue was direct sales of commercial equipment to Russia, Mitchill said, and the remainder was engine parts that would have been sold principally by Pratt & Whitney Canada.
"We remain confident in the long-term outlook for our businesses, supported by the return to travel and growing global defense budgets," Raytheon CEO Greg Hayes said in Tuesday's release.
The aerospace and defense giant confirmed on Tuesday plans for $2.5 billion in RTX stock buybacks during 2022.
Raytheon, with Lockheed, makes the Javelin anti-tank missile used effectively by Ukrainian troops vs. Russian armored vehicles.
Raytheon Stock
Shares tried to rebound, edging up 0.2% to 98.21, after a six-session decline. RTX has undercut the 50-day line and fallen roughly 6% below a 104.44 flat-base buy point. The relative strength line for RTX stock remains near highs after a solid rally in the past year.
Defense Spending Hits $2.113 Trillion
Global military spending topped $2 trillion for the first time, a new report Monday said. It grew by 0.7% last year to reach $2.113 trillion, according to the Stockholm International Peace Research Institute. The growth trend is likely to intensify this year, as Europe hikes defense spending after the Feb. 24 Russian invasion of Ukraine.
Defense stocks surged in late February on expectations of higher spending. But last week Lockheed Martin earnings took a hit from supply disruptions due to the Covid-19 omicron variant and rising inflation.
