Executive Mosaic’s GovCon Index scored a gain in choppy trade Tuesday on help from defense prime stocks such as Lockheed Martin (NYSE: LMT), which posted second quarter earnings and sales above analyst expectations but issued some caution to analysts on future earnings and the F-35 program.
The GovCon Index closed up 81.865 points to 0.279 and the S&P 500 that contains 11 GCI stocks posted a nominal decline to represent a continued slowdown from the post-Brexit rally amid mixed earnings reports.
Shares in Lockheed peaked at a gain of 1.73 percent in morning and reached a new 52-week high on its second quarter beats before the stock pared in afternoon trade and briefly hit negative after investors took note of warnings in a conference call with executives that the company needs a new contract from the Defense Department to sustain current F-35 production levels.
Lockheed is negotiating a new contract with DoD for F-35 lots nine and 10 and executives also told investors any share repurchases related to merger of its information systems and global solutions segment into Leidos Holdings (NYSE: LDOS) and the exchange offer for shareholders to own stock in Leidos post-combination may not equate to earnings neutral.
Leidos fell 39 cents — or 0.8 percent — Tuesday and that stock has declined 9.45 percent since the Jan. 26 announcement of its merger into IS&GS.
Large defense prime contractors and platform makers led GovCon Index gainers after Lockheed released second quarter results as Boeing (NYSE: BA), General Dynamics (NYSE: GD) and Northrop Grumman (NYSE: NOC) will report next week along with Raytheon (NYSE: RTN).
Raytheon’s stock closed down a nominal 3 cents and Northrop reached a new 52-week high as did L-3 Communications (NYSE: LLL).
Top GovCon Index Net Gainers
| Symbol | Company | $ Current Price | Net Change ▴ | % Change |
|---|---|---|---|---|
| LMT | Lockheed Martin * | 258.96 | 2.67 | 1.04% |
| GD | General Dynamics * | 143.31 | 2.31 | 1.64% |
| OA | Orbital ATK | 87.60 | 1.45 | 1.68% |
| BA | Boeing * | 134.66 | 1.23 | 0.92% |
| NOC | Northrop Grumman * | 221.55 | 0.74 | 0.34% |
Top GovCon Index Percentage Gainers
| Symbol | Company | $ Current Price | Net Change | % Change ▴ |
|---|---|---|---|---|
| OA | Orbital ATK | 87.60 | 1.45 | 1.68% |
| VEC | Vectrus | 31.11 | 0.51 | 1.67% |
| GD | General Dynamics * | 143.31 | 2.31 | 1.64% |
| LMT | Lockheed Martin * | 258.96 | 2.67 | 1.04% |
| BA | Boeing * | 134.66 | 1.23 | 0.92% |
*Also listed in the S&P 500 composite index
Market Summary
| Advancing GovCon Index Issues | 17 |
| Declining GovCon Index Issues | 12 |
| Unchanged GovCon Index Issues | 1 |
| Index | Value | Net Change | % Change |
|---|---|---|---|
| GovCon Index | 81.865 | +0.279 | +0.342% |
| S&P 500 | 2, 163.78 | -3.11 | -0.14% |
| Dow Jones Industrial Average | 18, 539.01 | +25.96 | +0.14% |
| NASDAQ | 5, 036.37 | -19.41 | -0.38% |
