• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Transportation

Business Jets in Focus Ahead of General Dynamics, Raytheon Earnings

Honeywell's struggles in its business jets segment could signal trouble for other aerospace industry leaders.
By ANDERS KEITZ Jul 25, 2016 | 05:31 PM EDT
Stocks quotes in this article: GD, RTN, HON

As General Dynamics (GD) and Raytheon (RTN) get ready to report their latest quarterly results, investors could look to Honeywell International's (HON) results for insight into the market for business jets.

During Honeywell's conference call last Friday following its quarterly results, CFO Thomas Szlosek said, "The demand environment in business jets is slower than we anticipated, and we expect this trend to continue in the second half."

Honeywell saw its aerospace sales decline 1% or 2% on a core basis, which was below expectations and primarily was due to weaker-than-expected sales in Defense and Space.

Both General Dynamics and Raytheon, which are reporting Wednesday and Thursday, respectively, could see similar results, especially given their exposure to business jets.

"Business jet orders will be in focus given concerns about weak demand, underscored by General Dynamics' lowest jet orders since 2009 in 1Q," said Bloomberg Intelligence analyst Douglas Rothacker in a July 20 research note.

General Dynamics already delivered four fewer business jets in the first quarter compared to the same period a year prior, as weak foreign demand led to production rate cuts, according to Rothacker.

Rothacker also said production cuts will likely continue to push aerospace revenue gains down to a low-to-mid-single digit pace, "though profitability is buoyed by stable deliveries of higher-margin G650s."

General Dynamics' stock was holding relatively flat ahead of its quarterly results. Analysts are forecasting adjusted earnings per share of $2.32 on revenue of $7.87 billion.

Meanwhile, Jefferies analysts said in a July 18 research note that defense ranked at the top of the S&P Aerospace Index for the latest 12-month performance period, with sharp advances at Raytheon, among others. But Jefferies also mentioned that "commercial lagged," adding that "expectations that demand will sharply end for civil jetliners appear to be influencing valuations."

The analysts are projecting earnings at Raytheon of $2.02 per share on revenue of $5.85 billion. The analyst team with Jefferies also noted that Raytheon's earnings "could expand 22% due to a gain of about $0.50 per share due to the reformation of a joint venture."

Wells Fargo analysts outlined the joint venture structure in a July 11 research note. They said the ThalesRaytheonSystems joint venture was restructured to focus on the delivery of Air Command and Control System, Theater Missile Defense and Ballistic Missile Defense to NATO agencies and member nations. The venture will become a wholly owned subsidiary of Raytheon.

According to the Wells Fargo analysts said, "RTN's electronics focus reduces its platform-specific exposure, and therefore, lowers its risk of a significant cut in revenue, earnings, or cash flow as a result of any cancellation or cutback."

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Investing | U.S. Equity | Transportation | Earnings

More from Transportation

Stay on Track While Interpreting the Dow Theory and CSX Corp.

Bruce Kamich
May 19, 2022 2:26 PM EDT

Some investors may be asking whether we're seeing another 'nail in the coffin' of the secular bull market as several transport names get downgraded. Let's not ... go off the rails.

J.B. Hunt's 18 Wheelers Are Ready to Roll Again

Bruce Kamich
May 17, 2022 1:15 PM EDT

Let's see what the charts and indicators look like.

At the Copa, Is It Takeoff or Landing?

Bruce Kamich
May 13, 2022 10:50 AM EDT

I found several 'interesting' things on this airline's charts.

Royal Caribbean: Don't Go Down With the Ship

Paul Price
May 11, 2022 7:00 AM EDT

All of the major cruise lines are suffering from their own form of long Covid, and they largely lacked a government lifesaver. Here's why even the best of the businesses looks like a sinking stock ... for now.

Transportation Is Still Iffy With XPO Logistics

Bruce Kamich
May 10, 2022 10:31 AM EDT

Here's what the overall picture shows.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login