As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q4. Today, we are looking at defense contractors stocks, starting with Northrop Grumman (NYSE: NOC).
Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.
The 14 defense contractors stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 3.9% above.
In light of this news, share prices of the companies have held steady as they are up 1.8% on average since the latest earnings results.
Northrop Grumman (NYSE: NOC)
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Northrop Grumman reported revenues of $10.69 billion, flat year on year. This print fell short of analysts’ expectations by 2.7%. Overall, it was a slower quarter for the company with a miss of analysts’ organic revenue estimates and full-year revenue guidance slightly missing analysts’ expectations.
The stock is up 5.9% since reporting and currently trades at $509.50.
Read our full report on Northrop Grumman here, it’s free.
Best Q4: Mercury Systems (NASDAQ: MRCY)
Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.
Mercury Systems reported revenues of $223.1 million, up 13% year on year, outperforming analysts’ expectations by 23.9%. The business had an incredible quarter with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EPS estimates.
Mercury Systems pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.5% since reporting. It currently trades at $46.09.
Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: AeroVironment (NASDAQ: AVAV)
Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
AeroVironment reported revenues of $167.6 million, down 10.2% year on year, falling short of analysts’ expectations by 10.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
AeroVironment delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 7.2% since the results and currently trades at $131.85.
Read our full analysis of AeroVironment’s results here.
CACI (NYSE: CACI)
Founded to commercialize SIMSCRIPT, CACI International (NYSE: CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.
CACI reported revenues of $2.1 billion, up 14.5% year on year. This print topped analysts’ expectations by 3.4%. It was an exceptional quarter as it also put up a solid beat of analysts’ backlog and EBITDA estimates.
The stock is down 19.8% since reporting and currently trades at $372.91.
Read our full, actionable report on CACI here, it’s free.
Leidos (NYSE: LDOS)
Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Leidos reported revenues of $4.37 billion, up 9.7% year on year. This result surpassed analysts’ expectations by 5.6%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ backlog estimates.
The stock is down 3.9% since reporting and currently trades at $137.25.
Read our full, actionable report on Leidos here, it’s free.
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