Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: U.S. defense contractor General Dynamics Corp. saw third-quarter profits rise $1.08/share (17%), slightly higher than Wall Street's $1.06 forecast, helped by strong sales of its government information systems, army vehicles and Gulfstream business jets. GD, manufacturer of Abrams tanks and Stryker combat vehicles, also operates intelligence networks for the U.S. government; it has benefited from heavy spending on Iraq and Afghanistan military operations. Revenues came in at $6.1B (+14.5%), a touch lower than the $6.27B forecasted. But shares fell yesterday $1.36 to $74.40. Bank of America analyst R. Stallard: "General Dynamics' stock has been very strong, and an in-line quarter may not be enough to sustain recent momentum." GD stock is up 21% in the last six months, vs. 4% for the S&P 500 index. Sales in information systems and technology rose 21% ($2.4B), combat systems were up 10% ($1.4B), aerospace rose 20% ($1.1B), marine systems was up just 4% ($1.2B). CEO N. Chabraja warned profit margins in some units would be down in Q4, and claimed Wall Street analysts were over-forecasting.
Related links: Conference call webcast • Iraq Project Translates Into Huge Dollars • 9/11: Its Lasting Impact on the Economy and Defense Stocks • Cramer mentions of GD: Mad Money In-Depth Stock Picks, Oct. 9 • Real Money Radio Recap, Oct. 5 • Mad Money In-Depth Stock Picks, Sept. 29 • Mad Money Lightning Round Picks, Sept. 26 • Previous earnings: General Dynamics Profits Up 84% -- Apparently Not Enough for Investors
Potentially impacted stocks and ETFs: General Dynamics Corp. (NYSE:GD) • Defence stocks: Lockheed Martin Corp. (NYSE:LMT), Northrop Grumman Corp. (NYSE:NOC), Armor Holdings Inc. (AH), Boeing Co. (NYSE:BA), Orbital Sciences Corp. (ORB) * ETFs: PowerShares Aerospace & Defense (NYSEARCA:PPA)
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