Aerospace & Defense ETFs to Watch Amid Q1 Earnings

The uptrend in the industry is mapped by the performance of the S&P Aerospace & Defense Select Industry Index, which has added 20.10% over the past year. With escalating geopolitical tensions and the depletion of weapon stocks, the global aerospace and defense sector is poised to witness significant growth in the coming years.

The ongoing war in the Middle East and East Europe is causing geopolitical tensions of one form or another, resulting in heightened global military spending. According to the Guardian, global military spending has surged to $2.44 trillion, following the largest yearly increase in government expenditures on arms in over 10 years.

Below, we highlight Q1 earnings results of a few renowned U.S. Aerospace – Defense Industry players.

Northrop Grumman

Northrop Grumman NOC reported first-quarter 2024 earnings of $6.32 per share, which beat the Zacks Consensus Estimate of $5.83 by 8.4%. The bottom line increased 15% from $5.50 recorded in the year-ago quarter, driven by an increase in operating income.

NOC's total sales of $10.13 billion beat the Zacks Consensus Estimate of $9.78 billion by 3.6%. The top line also increased 8.9% from $9.30 billion reported in the year-ago quarter. The company's operating income during the quarter totaled $1.07 billion, up 13.1% from $947 million in the prior-year quarter.

The company reiterated its 2024 guidance, projecting revenues in the range of $40.80-$41.20 billion and adjusted earnings in the band of $24.45-$24.85 per share.

RTX Corporation

RTX Corporation RTX reported first-quarter 2024 adjusted EPS of $1.34, which beat the Zacks Consensus Estimate of $1.23 by 8.9%. The bottom line also improved 9.8% from the year-ago quarter's level of $1.22.

RTX's first-quarter net sales totaled $19.3 billion, which surpassed the Zacks Consensus Estimate of $18.41 billion by 4.8%. The top line also improved 12% from $17.21 billion recorded in the first quarter of 2023. RTX posted an adjusted operating profit of $2.29 billion, up 6.5% from the year-ago quarter's reported figure of $2.15 billion.

RTX reiterated its guidance for 2024, with projected adjusted EPS in the band of $5.25-$5.40 and sales of $78-$79 billion.

General Dynamics

General Dynamics GD reported first-quarter 2024 EPS of $2.88, which missed the Zacks Consensus Estimate of $2.89 by 0.4%. However, the figure increased 9.1% from $2.64 per share recorded in the year-ago quarter.

GD's revenues of $10.73 billion in the reported quarter beat the Zacks Consensus Estimate of $10.2 billion by 5.2%. The top line also improved 8.6% from the prior-year reported figure. GD's operating earnings totaled $1.04 billion, up 10.4% from the year-ago quarter's $938 million.

General Dynamics recorded a total backlog of $93.73 billion, up 0.1% from the fourth-quarter level of $93.63 billion. The funded backlog at the end of the reported quarter was $73.17 billion.

Boeing

Boeing BA incurred an adjusted loss of $1.13 per share in first-quarter 2024, narrower than the Zacks Consensus Estimate of a loss of $1.43. The bottom line also improved from the year-ago quarter's reported loss of $1.27 per share.

Boeing's revenues amounted to $16.57 billion, which missed the Zacks Consensus Estimate of $17.69 billion by 6.3%. The top line also declined 8% from the year-ago quarter's reported figure of $17.92 billion, due to lower commercial delivery volume.

Backlog at the end of the first quarter of 2024 totaled $528.75 billion, up from $520.20 billion recorded at the end of fourth-quarter 2023.

Lockheed Martin

Lockheed Martin LMT reported first-quarter 2024 adjusted earnings of $6.33 per share, which beat the Zacks Consensus Estimate of $5.80 by 9.1%. The bottom line, however, declined 1.6% from the year-ago quarter's recorded figure of $6.43.

Net sales were $17.20 billion, which surpassed the Zacks Consensus Estimate of $16.19 billion by 6.2%. The top line also increased 13.7% from $15.13 billion reported in the year-ago quarter. LMT's backlog as of Mar 31, 2024, was $159.37 billion compared with $160.57 billion at the end of fourth-quarter 2023.

Lockheed has reiterated its financial guidance for 2024, expecting revenues in the range of $68.5-$70 billion. The company also continues to project EPS in the range of $25.65-$26.35.

ETFs in Focus

For investors looking to take a bet on Q1 results as well as a continued surge in military spending, the following Aerospace – Defense ETFs provide a great opportunity.

iShares U.S. Aerospace & Defense ETF ITA has gained 4.46% over the past three months and 15.74% over the past year.

Invesco Aerospace & Defense ETF PPA has gained 10.32% over the past three months and 26.86% over the past year.

SPDR S&P Aerospace & Defense ETF XAR has gained 4.10% over the past three months and 21.09% over the past year.

Global X Defense Tech ETF SHLD has gained 6.33% over the past month and 19.17% over the past three months.

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