The nation's third- and fourth-largest defense contractors on Wednesday beat Wall Street's first-quarter profit targets, posting strong gains in operating results driven by their combat and electronic systems businesses.
Raytheon Co., maker of the Patriot missile, business jets and radar systems, reported a 21 percent increase in profits from ongoing operations to edge past analysts' consensus estimate. But after the affect of a large charge, the company showed a net loss.
General Dynamics Corp. surprised analysts with a 15 percent jump in net profits that
easily surpassed expectations. The maker of nuclear submarines, tanks and destroyers followed by boosting guidance for full-year profits.
Defense stocks shot higher in Wednesday trading amid a broad market rally. The Standard & Poor's aerospace and defense index gained rose 1.2 percent to end at 1,344.88.
General Dynamics, which reported results before the market opened, jumped 3.9 percent, or $2.69 to close at $70.49, near a year-high of $79.
Raytheon, whose results were released after market hours, gained 2.98 percent during the session, or 95 cents to close at $32.85 - near a year-high of $36.68.
The financial reports from Raytheon and General Dynamics spurred optimism among some analysts and investors that numbers from other defense industry leaders would be positive.
Both Raytheon and General Dynamics generated stellar results from their defense-related segments.
Raytheon's earnings totaled $97 million, or $.28 per share, from continuing operations for the quarter compared with $80 million, or $.24 per share, a year ago. Including the impact of discontinued operations, the company had a net loss of $124 million, or $.36 per diluted share, versus a loss of $181 million, or $.54 per diluted share, a year ago.