July 19 Market Close: GovCon Index Flat, Lockheed Gains on 2Q Beat Despite F-35 & Profit Caution

GovConIndexUPExecutive 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%

Check Also

KBR

KBR Wins Potential $93M Navy Combat Integration System Support IDIQ

KBR’s (NYSE: KBR) government services business has won a potential five-year, $92.6M contract to engineer and produce datalink systems and associated platforms for the U.S. Navy’s combat operations.

DLA

DLA Awards Logistics Modernization Integration Support IDIQs to Advantaged Solutions, United Defense International

Advantaged Solutions and United Defense International have each received a potential five-year, $265M contract from the Defense Logistics Agency for logistics modernization integration support.