January 27 Market Close: Boeing, Booz Allen, Textron Declines Drag GovCon Index Below 70 to 3-Month Low

GovConIndexDOWNThe GovCon Index plunged 2.438 percent to 69.664 in its first close below the 70-point mark for the first time in almost four months to keep the 30-company listing in a correction, or at least 10 percent down from its most recent high.

Boeing (NYSE: BA) — also a Dow Jones Industrial Average stock — sank 8.93 percent after the Chicago-based airplane maker issued a fiscal year 2016 outlook below what Wall Street analysts expected to see and reported a year-to-year profit decline in its 2015 financial results.

Boeing also said it expects 2016 revenue to fall from 2015 figures on reduced commercial plane deliveries and the company’s sales outlook for the year also missed the consensus analyst estimate.

Revenue in the company’s defense segment, which represents roughly one-third of Boeing’s total sales, was relatively unchanged from 2015 and showed a modest year-over-year increase in the fourth quarter.

Both Leidos (NYSE: LDOS) and Lockheed Martin (NYSE: LMT) extended declines  into a second straight day — 5.43 and 1 percent respectively — after both companies announced a Reverse Morris Trust transaction, where Leidos will merge into Lockheed’s government services business.

Shares in Leidos have fallen 13.93 percent since Tuesday and Lockheed’s stock is down 1.49 percent since the announcement.

Textron (NYSE: TXT) was the GovCon Index’s largest decliner Wednesday at 13.36 percent after the defense and industrial conglomerate declared a 2016 earnings forecast that missed analyst expectations and said 2015 profit fell from the previous year.

McLean, Virginia-based consulting firm Booz Allen Hamilton (NYSE: BAH) fell 6.53 percent on guidance that its fiscal year 2016 revenue would show between zero- and two-percent growth and a narrowed earnings outlook.

The firm reported third quarter earnings that exceeded Wall Street expectations.

General Dynamics (NYSE: GD) recovered from a slow open to register a gain of 3.75 percent after CEO Phebe Novakovic told investors the company will devote nearly all of its free cash flow toward dividends and share repurchases in 2016.

The defense contractor and Gulfstream commercial airplane maker posted 2015 and fourth quarter earnings above Wall Street forecasts.

CGI Group (NYSE: GIB) was the Index’s top gainer at 3.75 percent after the Montreal-based technology services contractor posted first quarter earnings and revenue that exceeded analysts’ expectations.

U.S. stocks suffered losses as investors reacted to the Federal Reserve‘s statement that market volatility and a potential global market slowdown continued to concern leaders at the central bank, according to Reuters.

Fed leaders appeared to have reduced the odds of an interest rate increase at its March meeting, Reuters said.

GovCon Index Gainers

Symbol Company $ Current Price Net Change % Change
GIB CGI Group 40.93 +1.48 +3.75%
HNT Health Net 66.15 +1.17 +1.80%
GD General Dynamics* 129.00 +1.62 +1.27%

*Also listed in the S&P 500 composite index

Market Summary

Advancing GovCon Index Issues 3
Declining GovCon Index Issues 26
Unchanged GovCon Index Issues 1
Index Value Net Change % Change
GovCon Index 69.664 -1.741 -2.438%
S&P 500 1, 882.95 -20.68 -1.09%
Dow Jones Industrial Average 15, 944.46 -222.77 -1.38%
NASDAQ 4, 468.17 -99.51 -2.18%

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