Lockheed Martin Plummets After Earnings Report

Major Earnings Reports Impact Defense Sector Stocks

Several major defense contractors released their quarterly earnings reports, with mixed results affecting stock performance. Lockheed Martin saw a significant drop in its stock price after reporting substantial pretax losses, while Northrop Grumman experienced a rally following strong results.

Lockheed Martin reported earnings of $1.46 per share for the quarter, a sharp decline from $6.85 per share in the same period last year. Revenue increased slightly to $18.2 billion, but the company faced challenges across several programs. The Aeronautics classified program encountered design, integration, and test issues, leading to higher costs and schedule delays. As a result, the company recorded $1.6 billion in pretax losses on different programs, along with $169 million in charges, which impacted earnings by $5.83 per share.

The company also recognized $570 million in pretax losses on its Canadian Maritime Helicopter Program and $95 million on its Turkish Utility Helicopter Program. Despite these challenges, CEO Jim Taiclet highlighted positive developments, including additional F-35 purchases by allied nations and new contracts from the U.S. Army and Space Force.

Lockheed Martin lowered its earnings forecast for the year, now projecting between $21.70 and $22 per share, down from $27 to $27.30 per share. The company also revised its operating profit outlook to $6.6 billion to $6.7 billion, compared to its previous forecast of $8.1 billion to $8.2 billion. However, it maintained its revenue and free cash flow outlooks. Shares of Lockheed Martin fell 10.8% on Tuesday, bringing the year-to-date decline to over 15%.

Raytheon Technologies' Mixed Performance

Raytheon Technologies (RTX) reported an 11% increase in adjusted earnings to $1.56 per share, with revenue climbing 9% to $21.6 billion. Analysts had expected earnings of $1.44 per share and revenue of $20.63 billion. Raytheon's revenue rose 8% to $7 billion, driven by higher volumes in land and air defense systems. Pratt & Whitney sales jumped 12% to $7.63 billion despite a four-week work stoppage during the quarter. Collins Aerospace revenue increased 9% to $7.62 billion, fueled by growth in commercial aftermarket and defense sales.

RTX's backlog grew 15% to $236 billion. The company raised its revenue outlook for the year, projecting sales between $84.75 billion and $85.5 billion, up from its previous forecast of $83 billion to $84 billion. It also increased its organic sales growth forecast to 6% to 7%, compared to 4% to 6% previously. However, RTX cut its earnings guidance, now expecting adjusted earnings between $5.80 and $5.95 per share, down from $6 to $6.15 per share. The forecast reflects the impact of tariffs and recent tax legislation. Shares of RTX declined 1.6% on Tuesday, but the stock is still near record highs, with a 29% gain this year.

Northrop Grumman Surpasses Expectations

Northrop Grumman (NOC) reported earnings of $8.15 per share, up from $6.36 per share in the previous year. Revenue rose 9% to $10.4 billion, exceeding analysts’ expectations of $6.84 per share and $10.06 billion in revenue. CEO Kathy Warden noted strong global demand, with international sales jumping 18% during the quarter. Aeronautics systems revenue increased 2%, defense systems sales rose 7%, and mission systems revenue surged 14%. However, space systems revenue fell 12% due to the wind-down of the Next Generation Interceptor program and lower volume on satellite programs.

Northrop Grumman raised its 2025 outlook, lifting its earnings guidance to $25 to $25.40 per share, up from $24.95 to $25.35 per share. Sales are now expected to range from $42.05 billion to $42.25 billion, compared to $42 billion to $42.5 billion. Free cash flow is projected to be between $3.05 billion and $3.35 billion, up from $2.85 billion to $3.25 billion. Shares of Northrop Grumman jumped 9.4% on Tuesday, clearing a key buy point and marking a nearly 15% gain for the year.

Upcoming Earnings Reports

General Dynamics (GD), L3Harris (LHX), and Textron (TXT) will release their earnings reports later in the week. Investors are closely watching these companies as they navigate the evolving defense and aerospace landscape.

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