Executive Mosaic’s GovCon Index held higher Monday with large prime contractors the top advancers to offset a large decline by Rockwell Collins (NYSE: COL) on flat revenue guidance for its current fiscal year as U.S. stocks advanced on deal activity and new earnings reports.
GovCon Index gainers outnumbered laggers at a 5-to-1 ratio and nine of its 11 S&P 500 companies advanced with co-listed stocks Boeing (NYSE: BA) and Lockheed Martin (NYSE: LMT) as the GCI’s top two net performers in Monday trade.
Lockheed starts third quarter financial reporting season for large GovCon primes before markets open Tuesday and Wall Street analysts expect the world’s largest defense contractor to post $2.86 earnings per share at $11.45 billion in revenue.
Wednesday’s batch of third quarter reports includes Boeing, General Dynamics (NYSE: GD) and Northrop Grumman (NYSE: NOC); with Thursday’s slate to come from Raytheon (NYSE: RTN) and L-3 Communications (NYSE: LLL).
Bethesda, Md.-based Lockheed’s full-year guidance issued in July expects earnings of $12.15-$12.45 per share with $50 billion-$51.5 billion but the company will likely revise its expectations in light of the Aug. 16 spinoff and subsequent merger of its former estimated $5.6 billion government information technology and technical services segment to Leidos Holdings (NYSE: LDOS).
The consensus full-year analyst forecast for Lockheed has earnings at $11.75 per share and $46.36 billion in revenue, while shares in the F-35 manufacturer have declined 12.88 percent since the deal’s closure.
Defense platform and government services primes Science Applications International Corp. (NYSE: SAIC), General Dynamics and CACI International (NYSE: CACI) led GCI net advancers after Boeing and Lockheed.
SAIC ended as the GovCon Index’s second-best percentage mover after Vectrus (NYSE: VEC) and third-highest ICF (NYSE: ICFI) closed at a new 52-week high.
Shares in Rockwell Collins tumbled as the GCI’s worst net performer after the avionics company issued fiscal year 2017 guidance that indicated little organic growth for the 12 month-period from Oct. 1 as it also agreed to purchase cabin electronics maker B/E Aerospace (Nasdaq: BEAV) for nearly $6.4 billion.
Rockwell Collins expects the acquisition to add approximately $2.8 billion in revenue, while B/E Aerospace’s stock closed 16.36 percent higher to a 52-week high of $58.89 with volume of 20.2 million shares traded at 23 times the three-month average.
Eight S&P 500 sectors advanced with information technology the top performer and telecommunications the largest decliner on news of AT&T’s agreement to purchase Time Warner for at least $85 billion.
CNBC reported a strengthening dollar and oil price declines limited gains by U.S. equities that were also spurred by earnings reports from T-Mobile, VF Corp, Restaurant Brands and Kimberly Clark.
Market Summary
| Index | Value | Net Change | % Change |
|---|---|---|---|
| GovCon Index | 79.479 | +0.289 | +0.364% |
| S&P 500 | 2, 151.33 | +10.17 | +0.47% |
| Dow Jones Industrial Average | 18, 223.03 | +77.32 | +0.43% |
| NASDAQ | 5, 309.83 | +52.42 | +1.00% |
| Advancing GovCon Index Issues | 25 |
| Declining GovCon Index Issues | 5 |
| Unchanged GovCon Index Issues | 0 |
Top GovCon Index Net Performers
| Symbol | Company | $ Current Price | Net Change –´ | % Change |
|---|---|---|---|---|
| BA | Boeing * | 137.45 | +1.82 | +1.34% |
| LMT | Lockheed Martin * | 232.16 | +1.64 | +0.71% |
| SAIC | SAIC | 68.67 | +1.45 | +2.16% |
| GD | General Dynamics Corporation * | 151.44 | +1.26 | +0.84% |
| CACI | CACI International, Inc. | 101.25 | +1.10 | +1.10% |
Top GovCon Index Percentage Performers
| Symbol | Company | $ Current Price | Net Change | % Change –´ |
|---|---|---|---|---|
| VEC | Vectrus | 17.16 | +0.39 | +2.33% |
| SAIC | SAIC | 68.67 | +1.45 | +2.16% |
| ICFI | ICF | 46.50 | +0.90 | +1.97% |
| EGL | Engility Holdings | 29.69 | +0.48 | +1.64% |
| CUB | Cubic Corp. | 41.40 | +0.65 | +1.60% |
Lowest GovCon Index Net Performers
| Symbol | Company | $ Current Price | Net Change –¾ | % Change |
|---|---|---|---|---|
| COL | Rockwell Collins | 79.21 | -5.25 | -6.22% |
| MCK | McKesson Corp. * | 160.27 | -0.76 | -0.47% |
| OA | Orbital ATK | 75.78 | -0.27 | -0.36% |
| CSRA | CSRA * | 26.12 | -0.09 | -0.34% |
| CAE | CAE | 14.20 | -0.06 | -0.42% |
Lowest GovCon Index Percentage Performers
| Symbol | Company | $ Current Price | Net Change | % Change –¾ |
|---|---|---|---|---|
| COL | Rockwell Collins, Inc. | 79.21 | -5.25 | -6.22% |
| MCK | McKesson Corp. * | 160.27 | -0.76 | -0.47% |
| CAE | CAE | 14.20 | -0.06 | -0.42% |
| OA | Orbital ATK | 75.78 | -0.27 | -0.36% |
| CSRA | CSRA * | 26.12 | -0.09 | -0.34% |
