Defense stocks report 4Q results; LMT, RTX, NOC stocks rise.
The U.S. defense budget has been at all-time highs, but Republican lawmakers are pushing for cuts to reduce government debt which could potentially affect defense spending this year. Three major defense stocks reported fourth quarter results this week, with Lockheed Martin (LMT), Raytheon (RTX) and Northrop Grumman (NOC) all releasing their earnings.
Lockheed Martin reported earnings of $7.40 per share while revenue grew 7.3% to $19 billion. Their backlog increased 11% to $150 billion in Q4, driven by a higher volume of F-35 production contracts. The company also generated $1.2 billion in free cash flow for the period. For the 2023 fiscal year, Lockheed expects earnings to range from $26.60 to $26.90 per share on $65 billion to $66 billion in sales.
Raytheon reported earnings of $1.27 per share while revenue gained about 6%, to $18.09 billion. Their Missile & Defense segment led their quarterly results, driven by orders for equipment to Ukraine. Management guided 2023 revenue to between $72 and $73 billion.
Northrop Grumman is expected to report a 9.7% earnings increase to $6.58 per share on 11.8% revenue growth to $9.66 billion. The company provides counter-artillery equipment, radars and surveillance aircraft and systems, as well as F-35 fighter jets with Lockheed Martin.
Overall, defense stocks have seen mixed performance this week, with Lockheed Martin and Raytheon stocks rising following results and Northrop Grumman stock trading near July lows ahead of their Thursday earnings report. The Biden administration is also set to request congressional approval for a $20 billion sale of new F-16 jets to Turkey, as well as a separate sale of next-generation F-35 fighters to Greece. Investors will be watching closely to see how these developments will affect defense stocks in the coming weeks and months.