Executive Mosaic’s GovCon Index ticked 0.23% higher to $5,491.84 Friday, its only gain in five trading sessions. The index, which tracks the stock performances of 30 major government contractors, lost 2.24% week-on-week for its first losing week since the week ending Sept. 13. As of Oct. 25, 2024, the GovCon Index is up 17.64% year-to-date.
On Wall Street, only the tech-heavy Nasdaq Composite (+0.02%) had a positive week. Like the GovCon Index, the Dow Jones Industrial Average (-2.7%) ended its six-week winning run. The broader S&P 500 Index fell 0.96% for the week.
GovCon Index’s Top Gainer
The earnings season has shifted to high gear and 10 GovCon Index constituents presented their latest quarterly results. Booz Allen Hamilton (NYSE: BAH) and L3Harris Technologies‘ (NYSE: LHX) reports were well received. Their stocks popped 9.23% and 3.54%, respectively, on Oct. 25.
However, the shares of half of the companies that have reported, including Lockheed Martin (NYSE: LMT), Honeywell (NYSE: HON) and KBR (NYSE: KBR), pulled back after their corporate earnings presentations.
Booz Allen, the week’s top gainer, advanced 10.99% in five days following Friday’s breakout. In Q2 fiscal 2025, the net income of the military and government contractor climbed 128.5% to $390 million. The $3.1 billion revenue represents a record 18% year-over-year growth. Management raised the full-year revenue growth guidance from 11% to 13%.
Industry Outlook
Deloitte Research Center for Energy and Industrials expects the growth of the aerospace and defense industry to continue, if not accelerate, in 2025. The professional services firm sees that geopolitical tensions will push countries to increase defense spending. It also sees trends with the potential for broad-based operationalization of many technologies, such as artificial intelligence and advanced air mobility to unmanned systems, to continue.
Thus far, in 2024, AI stock Palantir Technologies (NYSE: PLTR) remains GCI’s top performer, with +161.27%. AeroVironment (Nasdaq: AVAV), a manufacturer of unmanned aerial vehicles, is up 75.26% year-to-date.
