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There's no business like the arms business: January was the best month for US defense stocks in a decade

Key Points
  • Here's how America's top five defense firms – Boeing, Lockheed Martin, General Dynamics, Northrop Grumman, and Raytheon – did during fourth-quarter earnings.
  • The benchmark iShares U.S. Aerospace and Defense ETF finished January up 12.3 percent – its best month since April 2009.
A Marine Corps Huey door gunner with unloads on a target at the Chocolate Mountain Aerial Gunnery Range, Calif., Oct. 2, 2013.
U.S. Marine Corps photo

Nobody spends money on arms like the United States.

The Trump administration's 2019 defense-friendly spending bill increased the Pentagon's spending power to a grand total of $717 billion.

And this week, America's top five defense firms – Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and Raytheon – posted their fourth-quarter earnings.

After all the earnings were in, the benchmark iShares U.S. Aerospace and Defense ETF finished January up 12.3 percent – its best month since April 2009.

Here's how America's defense industry giants did.

Lockheed Martin

Lockheed Martin's F-35 Lightning II fighter jet at a ceremony on
Lockheed Martin

Lockheed Martin reported quarterly earnings of $4.39 a share, just a cent shy of what Wall Street expected. The world's top weapons manufacturer reported strong fourth-quarter revenue of $14.4 billion. But Lockheed Martin said it expects 2019 earnings within a range of $19.15 a share to $19.45 a share, which was below analyst expectations of $19.57 a share.

The Pentagon's biggest weapons supplier snatched both of the military's new hypersonic missile contracts and continued delivery of its F-35 fighter jet, which is America's most expensive weapons system.

Boeing

U.S. Navy Aviation Electronics Technician signals to the crew of an EA-18G Growler on the flight deck of aircraft carrier USS Carl Vinson.
Department of Defense photo

Boeing's earnings were a smash hit, crushing Wall Street estimates by 91 cents with an adjusted quarterly profit of $5.48 a share. The aerospace manufacturer's quarterly revenue was also solid, at $28.3 billion. Additionally, Boeing reported $101.1 billion in annual revenue, breaking the $100 billion mark for the first time.

Boeing's defense unit reported $6.1 billion in fourth-quarter revenue. The company said the 16 percent year-over-year increase was driven by a rise in volume across F/A-18 fighter jets, satellites and weapon programs.

As the world's second largest defense firm, Boeing bagged a significant number of Pentagon contracts last year. In September alone, Boeing was awarded more than 20 contracts with a cumulative value of $13.7 billion.

The aerospace giant scored $805 million for the Navy's MQ-25 aerial refueling drone, $9.2 billion for the Air Force's T-X Trainer, $2.4 billion for the UH-1N helicopter replacement and $3.9 billion for twin Air Force One aircraft.

Boeing also delivered the long-delayed KC-46 tanker to the Air Force last week. The two aircraft, derived from Boeing's commercial 767 frame, touched down at McConnell Air Force Base in Kansas on Friday after departing the company's Everett, Washington, facility.

General Dynamics

Marines from 4th Tank Battalion, Twentynine Palms, Calif., roll down a dirt road on their M1A1 Abrams Main Battle Tank during a day of training. 
U.S. Marine Corps photo

General Dynamics results came in with no real surprises, as fourth-quarter earnings were $3.07 a share, above analyst estimates of $2.99 a share according to Refinitiv.

Known in part for America's stalwart M1 Abrams tank, General Dynamics saw a 4.9 percent year-over-year revenue increase in its combat systems unit to $6.2 billion.

In October, General Dynamics clinched a $26 million Pentagon contract to upgrade the U.S. military's M1A2 Abrams tanks. The M1 Abrams has been used in nearly every major U.S. conflict since its inception in 1980 and still serves as the main battle tank for the U.S. Army and Marine Corps.

Northrop Grumman

A KC-135 Stratotanker aircraft refuels a B-2 Spirit aircraft with the 509th Bomb Wing over Kansas Aug. 29, 2012.
U.S. Air Force photo

Northrop Grumman reported fourth-quarter earnings of $4.93 a share, well above analyst expectations of $4.32 a share according to Refinitiv, while revenue was $8.16 billion. However, the company forecast 2019 earnings between $18.50 a share and $19 a share – well below Wall Street expectations of $19.49 a share.

Northrop's aerospace systems unit sales increased 6 percent year over year due to higher volume for manned aircraft and space programs. In 2018, the defense firm snagged a colossal $429 million U.S. Air Force contract for the delivery of two payloads and another $3.6 billion for aircraft countermeasure systems.

Raytheon

U.S. Soldiers talk after a routine inspection of a Patriot missile battery at a Turkish military base in Gaziantep, Turkey.
Department of Defense photo

Raytheon, the world's largest missile manufacturer, saw fourth-quarter earnings of $2.93 a share, just above analyst estimates of $2.89 a share, according to Refinitiv.

Quarterly revenue was light, however, at $7.36 billion. Sales in Raytheon's key missile business missed expectations of $2.5 billion according to FactSet, reporting $2.3 billion in sales.

During the fourth quarter, Raytheon's missile systems unit was awarded $452 million for the AIM-9X Sidewinder short-range air-to-air missiles and $193 million for the Navy's Standard Missile-2 as well as another $563 million in classified contracts.