The escalating Middle East crisis, especially the conflict between Israel and Gaza, has resulted in a surge in defense stocks driven by increased demand for military equipment. Additionally, increasing tensions could lead to a rise in defense expenditures by the United States and its European counterparts, benefiting defense stocks.
The S&P Aerospace & Defense Select Industry Index has added 1.66% over the past month, outperforming the broader S&P 500 Index, which has fallen by 3.52% over the past month (as of Oct 26).
Below, we highlight Q3 earnings results of a few renowned U.S. Aerospace – Defense Industry players.
Earnings in Focus
Northrop Grumman
On Oct 26, Northrop Grumman NOC reported third-quarter 2023 earnings of $6.18 per share, beating the Zacks Consensus Estimate of $5.81 by 6.4%. The upbeat earnings were boosted by robust ammunition and rocket motor demand, particularly in guided multiple-launch rocket systems. The company has gained about 11.93% over the past month (as of Oct 26).
The bottom line increased 5% from $5.89 per share recorded in the year-ago quarter. Reporting total sales of $9.78 billion, NOC beat the Zacks Consensus Estimate of $9.67 billion by 1.1%. Additionally, the top line increased 9% from $8.97 billion in the year-ago quarter.
Northrop Grumman raised parts of its financial guidance for 2023, currently expecting revenues of $39 billion compared with its previous guidance of $38.40-$38.80 billion.
RTX CORP
On Oct 24, RTX CORP RTX reported third-quarter 2023 earnings of $1.25, beating the Zacks Consensus Estimate of $1.19 by 5%. The company has gained about 9.63% over the past month (as of Oct 26).
The bottom line also improved 3.3% from the year-ago quarter’s level of $1.21. RTX reported third-quarter sales of $18.95 billion which surpassed the Zacks Consensus Estimate of $18.71 billion by 1.3%. The company reported GAAP sales of $13.49 billion compared with $16.95 billion in the third quarter of 2022.
RTX Corp. has updated its financial guidance for 2023, raising its adjusted sales guidance to $74 billion from earlier projected $73-74 billion.
General Dynamics
On Oct 25, General Dynamics GD reported third-quarter 2023 earnings of $3.04, which beat the Zacks Consensus Estimate of $2.87 by 5.9%. The company has gained about 10.20% over the past month (as of Oct 26).
According to Reuters, the company found relief from increased costs as the need to replenish supplies for Ukraine drove demand for artillery and armored vehicles. The Pentagon’s investments in equipment replacement also helped the global aerospace and defense company’s cause.
GD’s revenues of $10.57 billion beat the Zacks Consensus Estimate of $9.94 billion by 6.4% and improved 6% from the prior-year reported figure.
Boeing
On Oct 25, Boeing BA reported third-quarter 2023 results. The company posted mixed results, while reducing the 2023 delivery projections for its 737 jets due to quality concerns at its supplier. BA has fallen about 8.61% over the past month (as of Oct 26).
Boeing incurred an adjusted loss of $3.26 per share in third-quarter 2023, wider than the Zacks Consensus Estimate of a loss of $3.21. However, the bottom line improved from the year-ago quarter’s reported loss of $6.18 per share.
BA’s revenues amounted to $18.10 billion, which missed the Zacks Consensus Estimate of $18.25 billion by 0.8%. However, the top line improved by 13% from the year-ago quarter’s reported figure of $15.96 billion. This improvement was driven by higher year-over-year revenues registered by the company’s three business units, Commercial Airplane, Global Services and Boeing Defense, Space & Security.
ETFs in Focus
The aforementioned stocks have considerable exposure to Aerospace – Defense ETFs. For investors looking to take a bet on the surging sector, the following ETFs provide a great opportunity.
iShares U.S. Aerospace & Defense ETF (ITA) – Up about 2.51% over the past month (as of Oct 26)
Invesco Aerospace & Defense ETF (PPA) – Up about 1.82% over the past month (as of Oct 26)
SPDR S&P Aerospace & Defense ETF (XAR) – Up about 3.60% over the past month (as of Oct 26)
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The Boeing Company (BA) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports
Invesco Aerospace & Defense ETF (PPA): ETF Research Reports
SPDR S&P Aerospace & Defense ETF (XAR): ETF Research Reports
RTX Corporation (RTX) : Free Stock Analysis Report
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