The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how BWX (NYSE:BWXT) and the rest of the defense contractors stocks fared in Q1.
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 13 defense contractors stocks we track reported a strong Q1; on average, revenues beat analyst consensus estimates by 3.5%. while next quarter's revenue guidance was 0.7% above consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and defense contractors stocks have held roughly steady amidst all this, with share prices up 0.2% on average since the previous earnings results.
BWX (NYSE:BWXT) Contributing components and materials to the famous Manhattan Project in the 1940s, BWX (NYSE:BWXT) is a manufacturer and service provider of nuclear components and fuel for government and commercial industries.
BWX reported revenues of $604 million, up 6.3% year on year, in line with analysts' expectations. Overall, it was a strong quarter for the company with a solid beat of analysts' Government Operations revenue estimates and a decent beat of analysts' earnings estimates.
"We started 2024 with solid operating results in each of our business segments, both financially and strategically,” said Rex. D. Geveden, president and chief executive officer.
BWX delivered the weakest full-year guidance update of the whole group. The stock is down 1.1% since reporting and currently trades at $97.79.
Is now the time to buy BWX? Find out by reading the original article on StockStory, it's free.
Best Q1: 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 $10.13 billion, up 8.9% year on year, outperforming analysts' expectations by 3.8%. It was a stunning quarter for the company with an impressive beat of analysts' organic revenue estimates and a decent beat of analysts' earnings estimates.
Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 9.6% since reporting. It currently trades at $429.16.
Weakest Q1: Mercury Systems (NASDAQ:MRCY) Listed on the NASDAQ in 1998, Mercury Systems (NASDAQGS:MRCY) specializes in providing processing subsystems and components for defense applications.
Mercury Systems reported revenues of $208.3 million, down 21% year on year, falling short of analysts' expectations by 2.9%. It was a weak quarter for the company with a miss of analysts' earnings and organic revenue estimates.
Mercury Systems posted the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 1.6% since the results and currently trades at $29.57.
AeroVironment (NASDAQ:AVAV) Focused on the future of autonomous military combat, AeroVironment (NASDAQGS:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
AeroVironment reported revenues of $197 million, up 5.9% year on year, surpassing analysts' expectations by 4.2%. Taking a step back, it was a solid quarter for the company with an impressive beat of analysts' earnings estimates.
The stock is down 8.8% since reporting and currently trades at $176.03.
Huntington Ingalls (NYSE:HII) Building Nimitz-class aircraft carriers used in active service, Huntington Ingalls (NYSE:HII) develops marine vessels and their mission systems and maintenance services.
Huntington Ingalls reported revenues of $2.81 billion, up 4.9% year on year, in line with analysts' expectations. More broadly, it was a solid quarter for the company with a decent beat of analysts' earnings estimates.
The stock is down 9.1% since reporting and currently trades at $251.70.
This content was originally published on Stock Story
