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The Zacks Analyst Blog Highlights: Harris, Huntington Ingalls Industries, Spirit Aerosystems, L3 Technologies, Raytheon and Leidos Holdings

Zacks Equity Research
Updated
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For Immediate Release

Chicago, IL – August 7, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Harris Corporation HRS, Huntington Ingalls Industries, Inc. HII, Spirit Aerosystems Inc. SPR, L3 Technologies, Inc. LLL, Raytheon Company RTN and Leidos Holdings, Inc. LDOS.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Defense Stock Roundup: Trade War Fears Re-Emerge, Earnings Beat at HII, LLL & RTN

The Q2 earnings season is set to enter its last leg, with more than 381 S&P 500 companies having released their quarterly numbers as of Aug 2. Of these index members, 80.1% delivered an earnings beat while 73.8% surpassed revenue estimates. Notably, for the S&P 500 index as a whole, total Q2 earnings are expected to grow 23.9% from the figure registered in last year’s second quarter on 9.3% revenue growth.

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Coming to projection for the Zacks Aerospace sector, Q2 earnings for the stocks in this space are expected to improve 24.4% year over year on 7.7% sales growth, as of Aug 2.

However, such impressive numbers failed to drive the defense stocks over the last five trading sessions because of the broader stock market’s dismal performance. In particular, the Trump administration’s announcement to raise the rate of proposed tariffs from 10% to 25% on $200-billion worth of goods from China triggered possibility of trade war, rattling the global stock market. Consequently, major indices of the Aerospace-Defense space — both the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense index slipped 1.4% in the trailing five trading session.

Nevertheless, quarterly results from a number of Aerospace-Defense majors, namely Harris Corporation, Huntington Ingalls Industries, Inc., Spirit Aerosystems Inc., L3 Technologies, Inc., Raytheon Company and Leidos Holdings, Inc. remained a key area of investors focus.

Recap of Past Week’s Important Stories

1. Harris Corp’s fourth-quarter fiscal 2018 GAAP earnings from continuing operations increased to $1.74 per share from $1.35 in the year-ago quarter on top-line growth and tax benefit. Revenues in the quarter increased 8% year over year to $1,666 million and surpassed the Zacks Consensus Estimate of $1,618 million.

Harris Corp expects to realize revenues in the range of $6.53-$6.65 billion in fiscal 2019, up 6-8% from fiscal 2018 (read more: Harris Surpasses Q4 Earnings and Revenue Estimates).

2. Huntington Ingalls’ second-quarter 2018 earnings of $5.40 per share outpaced the Zacks Consensus Estimate of $4.21 by 28.3%.Total revenues came in at $2.02 billion, which exceeded the consensus mark of $1.90 billion by 6.2%.

At the end of second-quarter 2018, cash from operating activities totaled $359 million compared with $284 million at the end of 2017’s second quarter (read more: Huntington Ingalls Q2 Earnings Top, Revenues Up Y/Y).

3. Spirit AeroSystems reported second-quarter 2018 adjusted earnings of $1.63 per share, which came ahead of the Zacks Consensus Estimate of $1.51 by 7.9%. However, total sales of $1,837 million missed the Zacks Consensus Estimate of $1,855 million by 1%.

Cash flow from operating activities increased to $397.2 million at the end of second-quarter 2018 from $334 million at the end of second-quarter 2017 (read more: Spirit AeroSystems Q2 Earnings Beat, Revenues Lag).

4. L3 Technologies reported second-quarter 2018 adjusted earnings of $2.47 per share from continuing operations, which trumped the Zacks Consensus Estimate of $2.30 by 7.4%. In the quarter under review, total revenues came in at $2.58 billion, outpacing the Zacks Consensus Estimate of $2.48 billion by 4.1%.

L3 Technologies raised its 2018 guidance. The company now expects adjusted earnings to be in the range of $9.80-$10.00 per share compared with $9.40-$9.60 guided earlier (read more: L3 Technologies Beats on Q2 Earnings, Hikes '18 View).

5. Raytheon reported second-quarter 2018 adjusted earnings per share (EPS) from continuing operations of $2.45, beating the Zacks Consensus Estimate of $2.32 by 5.6%. The company's second-quarter revenues totaled $6,625 million, which increased 5.5% on a year-over-year basis.

Raytheon ended the second quarter with cash and cash equivalents of $3,094 million, down from $3,103 million as of Dec 31, 2017. The company raised its 2018 guidance for the top and bottom line (read more: Raytheon Beats on Q2 Earnings, Raises '18 Guidance).

6. Leidos Holdings posted second-quarter 2018 adjusted earnings of $1.12 per share, which outpaced the Zacks Consensus Estimate of $1.05 by 6.7%. Total revenues came in at $2,529 million, which lagged the Zacks Consensus Estimate of $2,563 million by 1.3%.

Cash and cash equivalents as of Jun 29, 2018 were $303 million compared with $390 million as of Dec 29, 2017. Leidos Holdings reaffirmed its guidance for 2018 (read more: Leidos Holdings Beats on Q2 Earnings, Revenues Lag).

Performance

Over the last five trading sessions, majority of defense biggies put up a dismal show, except Lockheed Martin. Notably, General Dynamics lost the most with 2.3% share price decline, followed by Northrop Grumman.

The industry's performance over the last six months has been a mixed bag. Textron gained the most, with its shares rallying 18.3%, followed by Boeing. However, General Dynamics lost the most with its share price having dropped more than 8%.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Harris Corporation (HRS) : Free Stock Analysis Report
 
Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report
 
Raytheon Company (RTN) : Free Stock Analysis Report
 
L3 Technologies Inc. (LLL) : Free Stock Analysis Report
 
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