Northrop Grumman reported mixed fourth quarter results early Thursday after General Dynamics rolled out mixed results Wednesday. Lockheed Martin beat analyst expectations Tuesday.
Northrop sold off Thursday. LMT stock dipped Thursday while General Dynamics rose slightly, both up for the week so far. Defense stocks have looked strong in the current market correction, with allies turning a wary eye toward Russia mobilizing near Ukraine.
Northrop Earnings
Estimates: Northrop earnings per share are expected to fall to $5.96 on revenue of $9 billion.
Results: Northrop earnings per share fell 9% to $6 with revenue down 15% to $8.6 billion. Revenue at the aeronautics unit fell 25% to $2.63 billion.
Northrop is building the B-21 bomber for the Air Force. But information about the aircraft's cost remains classified. It is also investing in hypersonic weapons projects as well as hypersonic defense systems.
NASA announced Monday that Northrop's James Webb Space Telescope arrived at its observation point a million miles away from Earth. The telescope was launched on Christmas after several years of delays.
Outlook: Northrop sees full-year EPS of $24.50 to $25.10 on revenue of $36.2 billion to $36.6 billion. FactSet analysts expect EPS of $25.08 on revenue of $37.05.
Stock: NOC stock tumbled 7.25% to 373.99, falling away from a 408.13 buy point within a cup base.
General Dynamics Earnings
Estimates: General Dynamics earnings per share were seen falling 10% to $3.37, according to FactSet. Revenue was expected to rise 2%, to $10.67 billion.
Results: Revenue came in below expectations, at $10.29 billion. Basic EPS were $3.42, diluted earnings were $3.39 — both year-ago levels, but topping analyst targets.
Stock: Shares rose 1.9% to 208.80 on Thursday. GD stock is fighting to hold support at its 10-week moving average, after giving up gains from a breakout above a cup-with-handle buy point of 209.18 at the start of the year.
The RS line for General Dynamics stock is at a 52-week high.
Boeing also reported Q4 results on Wednesday that included charges on two key programs.
Defense Stocks: Lockheed Earnings
The Federal Trade Commission announced Tuesday that it sued to block Lockheed's $4.4 billion acquisition of Aerojet Rocketdyne.
"The agency's complaint alleges that if the deal is allowed to proceed, Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense," the FTC said.
Lockheed had warned earlier Tuesday that it was "highly likely" that the Federal Trade Commission would vote to block its acquisition. The company has 30 days after the filing of a lawsuit to make that decision to defend or terminate the contract.
Lockheed's earnings per share rose to $7.47 on revenue of $17.73 billion. Analysts polled by FactSet saw Lockheed earnings climbing 12% to $7.16 per share with revenue up 4% to $17.66 billion.
Aeronautics' sales rose 6% year-over-year to $7.12 billion on higher volumes of the F-35 and classified contracts.
The F-35 joint strike fighter is Lockheed's biggest moneymaker. Last month, the Finnish Air Force announced it will buy 64 F-35A stealth fighters to replace its aging Boeing F/A-18 Hornets. The deal comes as tensions with Russia rise.
In general, defense contractors faced supply chain issues in recent quarters. But Lockheed was able to deliver 142 F-35s in 2021, beating its target by three jets.
While the aeronautics unit is Lockheed's largest revenue-wise, missiles have been a growing revenue stream for Lockheed in recent quarters. Revenue from the missiles and fire control unit jumped 12% to $3.22 billion.
Revenue at its space unit fell 10% to $2.9 billion.
The company sees hypersonic weapon sales hitting $3 billion by 2026. That's up from $1 billion in 2020 and $600 million in 2019. The company has six hypersonic weapons programs and CEO Jim Taiclet told analysts last quarter that he expects "multiple" programs starting production between 2023 and 2026.
Outlook: Lockheed sees full-year 2022 EPS of $26.70 on $66 billion in revenue. FactSet analysts expect EPS of $26.56 on revenue of $66.52 billion.
"Looking ahead to 2022, we will remain fully dedicated to service to our customers and dynamic and disciplined capital allocation for the benefit of our shareholders," Taiclet said in the release.
The federal government is currently operating under a continuing resolution as congress debates appropriations bills. But CFO John Mollard said it would take a full-year continuing resolution to really impact its revenue guidance.
Supply chain disruptions are also easing in 2022, helping improve guidance. During the earnings call, Lockheed said that "bow wave has passed in supply chain disruption for the company but "not all the risk is out of the system yet."
Stock: Shares fell 0.5% to 389.14 in Thursday's stock market trading. LMT stock is in consolidation with a 397.09 entry point.
Aerojet shares rose slightly for a second straight day after plunging 18.6% on Tuesday.
Defense stocks usually rally during geopolitical crises. The Biden administration is considering sending several thousand troops to Europe. Washington will also allow Estonia, Lithuania and Latvia to send American-made weapons to Ukraine amid a ramp-up of Russian troops near Ukraine's border.
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