Executive Mosaic’s GovCon Index registered its second loss of at least 1 percent in six sessions Friday to register its second consecutive weekly decline on Honeywell International‘s (NYSE: HON) largest one-day plunge in 15 months on an earnings guidance miss and other falls by mid-tier contractors.
Friday’s sharp decline puts the GCI at a close below 80 points for the first time since Sept. 21 and occurred in the midst of narrow trade in U.S. markets to put stocks on course for a third straight weekly decline as investors looked at September jobs numbers that fell below economists’ expectations.
GovCon Index decliners outnumbered laggers by a 5-to-1 ratio Friday with Northrop Grumman (NYSE: NOC), McKesson Corp. (NYSE: MCK) and Harris Corp. (NYSE: HRS) the GCI’s lone S&P 500-listed stocks to close green.
On a weekly basis, seven GCI stocks advanced with KBR (NYSE: KBR) as the best percentage performer over five days and Boeing (NYSE: BA) the only co-listed company to gain.
Honeywell posted its biggest one-day decline in 15 months and was the S&P 500’s second-worst net performer after the company issued new third quarter earnings guidance below the Wall Street analyst consensus with a cut to full-year expectations on lower shipments in the aerospace division, the Sept. 20 sale of its government services business to KBR (NYSE: KBR) and the separation of its former automation and control solutions business into two new reporting segments.
Honeywell expects third quarter earnings per share of $1.60 excluding a 7-cent stock compensation restructuring versus analyst forecasts of $1.70 and trimmed full-year EPS expectations to $6.60-$6.64 from the prior $6.60-$6.70 outlook.
Honeywell also forecasts core organic revenue for 2016 to decline 1-2 percent compared to prior guidance of a 1 percent sales fall.
Approximately 19.87 million shares in Honeywell traded Friday to exceed the three-month average eight-fold.
The GovCon Index’s notable net decliners included other aerospace and defense stocks Rockwell Collins (NYSE: COL), Textron (NYSE: TXT) and Raytheon (NYSE: RTN) with government services contractor CACI International (NYSE: CACI) also a major contributor to the GCI’s loss.
Booz Allen Hamilton (NYSE: BAH) retreated below its Wednesday close to give back gains from its Thursday rally on volatility in the stock after news surfaced over the FBI probe of a firm employee as volume totaled 2.33 million shares traded to top the three-month average by three times.
Volume in Booz Allen’s stock has exceeded the three-month average for three consecutive days.
U.S. investors kept their expectations as is over when the Federal Reserve will raise interest rates and now turn their attention to third quarter corporate earnings season with many GovCon Index-listed companies slated to report results this month.
According to Bloomberg, bond markets have the probability of a December rate hike at 66 percent with odds of an increase in November at 17 percent compared to 24 percent before the Labor Department released September’s payrolls figures.
Market Summary
| Index | Value | Net Change | % Change |
|---|---|---|---|
| GovCon Index | 79.859 | -0.848 | -1.298% |
| S&P 500 | 2, 153.74 | -7.03 | -0.33% |
| Dow Jones Industrial Average | 18, 240.49 | -28.01 | -0.15% |
| NASDAQ | 5, 292.85 | -14.45 | -0.27% |
| Advancing GovCon Index Issues | 5 |
| Declining GovCon Index Issues | 25 |
| Unchanged GovCon Index Issues | 0 |
Lowest GovCon Index Net Performers
| Symbol | Company | $ Current Price | Net Change –¾ | % Change |
|---|---|---|---|---|
| HON | Honeywell International Inc. * | 106.94 | -8.67 | -7.50% |
| CACI | CACI International | 101.37 | -2.41 | -2.32% |
| RTN | Raytheon * | 136.78 | -1.47 | -1.06% |
| COL | Rockwell Collins | 82.73 | -1.45 | -1.72% |
| TXT | Textron * | 38.49 | -1.42 | -3.56% |
Lowest GovCon Index Percentage Performers
| Symbol | Company | $ Current Price | Net Change | % Change –¾ |
|---|---|---|---|---|
| HON | Honeywell International * | 106.94 | -8.67 | -7.50% |
| NAV | Navistar International | 22.63 | -1.06 | -4.47% |
| TXT | Textron * | 38.49 | -1.42 | -3.56% |
| BAH | Booz Allen Hamilton | 30.19 | -0.89 | -2.86% |
| EGL | Engility Holdings | 30.40 | -0.89 | -2.84% |
Top GovCon Index Net Performers
| Symbol | Company | $ Current Price | Net Change –´ | % Change |
|---|---|---|---|---|
| NOC | Northrop Grumman * | 215.43 | +1.22 | +0.57% |
| MCK | McKesson Corp. * | 165.82 | +1.07 | +0.65% |
| MANT | ManTech International | 38.65 | +0.42 | +1.10% |
| HRS | Harris Corp. * | 92.62 | +0.34 | +0.37% |
| VEC | Vectrus | 16.44 | +0.19 | +1.17% |
Top GovCon Index Percentage Performers
| Symbol | Company | $ Current Price | Net Change | % Change –´ |
|---|---|---|---|---|
| VEC | Vectrus | 16.44 | +0.19 | +1.17% |
| MANT | ManTech International | 38.65 | +0.42 | +1.10% |
| MCK | McKesson Corp. * | 165.82 | +1.07 | +0.65% |
| NOC | Northrop Grumman * | 215.43 | +1.22 | +0.57% |
| HRS | Harris Corp. * | 92.62 | +0.34 | +0.37% |
