From Nasdaq: 2024-07-26 08:22:00

The second-quarter reporting cycle for aerospace-defense stocks has begun with mixed results from major defense contractors like Lockheed Martin and Textron exceeding earnings expectations, while General Dynamics fell short. The sales performance of remaining stocks is anticipated to be strong due to geopolitical instabilities and increasing commercial air travel.

The United States’ defense budget has been a key driver for the aerospace-defense industry, with a proposed $850 billion funding for the U.S. Department of Defense for fiscal 2025 expected to boost order inflows for defense primes. Increased spending on security aid to nations like Ukraine and Israel has also supported the industry.

Commercial air passenger traffic growth has been beneficial for aerospace-defense stocks like Embraer, with a 3.2% year-over-year improvement expected in the Commercial Aviation business segment revenue for the second quarter. However, supply chain disruptions and high interest expenses may have negatively impacted overall performance.

Earnings for the Aerospace sector are projected to decline 2.3% year over year in the second quarter, despite an expected 4% improvement in sales. Defense stocks like Leidos Holdings, Curtiss-Wright Corporation, Embraer, and Huntington Ingalls Industries are anticipated to report positive earnings this cycle, buoyed by factors like increased sales volumes and demand for defense electronics products.

Leidos Holdings, with an Earnings ESP of +1.33% and a Zacks Rank #3, is set to release earnings on Jul 30, with an estimated sales improvement of 4.5% year over year. Curtiss-Wright Corporation, also with an Earnings ESP of +2.42% and a Zacks Rank #3, is expected to report sales growth of 4.5% in second-quarter results on Aug 7. Aerospace major Embraer, with an Earnings ESP of +21.55% and a Zacks Rank #3, is anticipated to see sales rise by 8.7% for the quarter ending Aug 8. Lastly, Huntington Ingalls Industries, with an Earnings ESP of +0.39% and a Zacks Rank #2, is projected to report a 1.9% improvement in sales on Aug 1.

These companies’ performance reflects the broader trends in the aerospace-defense sector, with key factors like defense budget, geopolitical instabilities, and commercial air travel shaping the industry’s growth in the second quarter.



Read more at Nasdaq:: 4 Aerospace-Defense Stocks Poised to Beat on Q2 Earnings