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The Zacks Analyst Blog Highlights: Raytheon, Northrop, TransDigm, Spirit and Honeywell

For Immediate Release

Chicago, IL –February 11, 2019 – 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: Raytheon Company RTNNorthrop Grumman Corp. NOCTransDigm Group Inc. TDGSpirit AeroSystems Holdings, Inc. SPR and Honeywell International Inc. HON.

Here are highlights from Friday’s Analyst Blog:

Defense Stock Roundup: RTN, NOC, TDG and More

The Zacks Aerospace sector saw Q4 results from 80% of the constituent stocks, as of Feb 6. The earnings beat ratio for these companies were 87.5%, with revenue beat ratio being 75%.

These quarterly numbers must have led the major indices of the Aerospace-Defense space to end in the green over the trailing five trading sessions. Notably, the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense index — gained 3.3% in the aforementioned time period.

Among the past week’s highlights, quarterly results from a number of Aerospace-Defense majors namely Raytheon Company, Northrop Grumman Corp., TransDigm Group Inc., Spirit AeroSystems Holdings, Inc. and Honeywell International Inc. remained a key area of investors’ focus.

Recap of the Past Week’s Important Stories

1.    Raytheon reported fourth-quarter 2018 earnings per share (EPS) of $2.93 from continuing operations, which outpaced the Zacks Consensus Estimate of $2.89 by 1.4%. Meanwhile, the company’s sales of $7,360 million increased 8.5% on a year-over-year basis.

The company’s bookings totaled $8,447 million compared with $8,541 million in the year-ago quarter, reflecting a drop of 1.1%. Its operating cash flow from operating activities amounted to $3,428 million in 2018 compared with $2,747 million in 2017.

Raytheon currently expects to generate revenues in the range of $28.6-$29.1 billion and earnings from continuing operations of around $11.40-$11.60 per share (read more: Raytheon Q4 Earnings Surpass Estimates, Sales Up Y/Y).

2.    Northrop Grumman reported fourth-quarter 2018 earnings of $4.93 per share, which exceeded the Zacks Consensus Estimate of $4.45 by 10.8%. Total revenues came in at $8,156 million, beating the Zacks Consensus Estimate of $8,109 million by 0.58%.

Northrop Grumman’s cash and cash equivalents as of Dec 31, 2018, were $1,579 million, down from $11,225 million as of Dec 31, 2017. Net cash inflow from operating activities as of Dec 31, 2018, was $3,827 million compared with $2,613 million as of Dec 31, 2017.

Northrop Grumman currently expects to generate revenues in excess of $34 billion in 2019 (read more: Northrop Grumman Beats on Q4 Earnings, Revenues Up Y/Y).

3.    TransDigm Group’s first-quarter fiscal 2019 adjusted earnings came in at $3.85 per share, surpassing the Zacks Consensus Estimate of $3.35 by 14.9%. Net sales amounted to $993.3 million, reflecting year-over-year growth of 17.1% from $848 million registered in the prior-year quarter.

TransDigm ended the first quarter of fiscal 2019 with cash and cash equivalents of $2,337.3 million, up from $2,073 million as of Dec 29, 2018.

Transdigm raised its 2019 financial guidance. Net sales are now anticipated in the range of $4,145-$4,235 million compared with $4,125-$4,215 million anticipated earlier (read more: TransDigm Q1 Earnings Beat Estimates, FY19 View Up).

4.    Spirit AeroSystems reported fourth-quarter 2018 adjusted earnings of $1.85 per share, which trumped the Zacks Consensus Estimate of $1.78 by 4%. In the meantime, total revenues of $1,835 million lagged the Zacks Consensus Estimate of $1,858 million by 1.2%.

Backlog at the end of fourth-quarter 2018 was $48 billion, in line with the prior-quarter’s number. Cash flow from operating activities increased to $769.9 million at the end of 2018 from $573.7 million at the end of 2017.

The company currently expects adjusted earnings per share in the range of $7.35-$7.60 on revenues of $8.0-$8.2 billion (read more: Spirit AeroSystems Q4 Earnings Beat, Revenues Miss).

5.    Honeywell’s adjusted earnings for the fourth quarter of $1.91 per share outpaced the Zacks Consensus Estimate of $1.88. Revenues amounted to $9,729 million, which surpassed the consensus estimate of $9,691 million.

Exiting 2018, Honeywell had cash and cash equivalents of $9,287 million, higher than $7,059 million as of Dec 31, 2017.

Honeywell currently expects its 2019 earnings within the $7.80-$8.10 per share range (read more: Honeywell's Q4 Earnings and Revenues Beat Estimates).

Performance

Over the past five trading sessions, the defense biggies put up a solid show. L3 Technologies gained the most with 9% increase in share price, followed by Boeing.

However, the industry's performance over the last six months has been mixed. While shares of Boeing have gained a solid 15.5%, Textron lost 14%.

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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Northrop Grumman Corporation (NOC): Free Stock Analysis Report
 
Spirit Aerosystems Holdings, Inc. (SPR): Get Free Report
 
Transdigm Group Incorporated (TDG): Free Stock Analysis Report
 
Honeywell International Inc. (HON): Free Stock Analysis Report
 
Raytheon Company (RTN): Get Free Report
 
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