This week we will learn the Q3 earnings results from the nation's largest defense contractors. Margins are likely to tighten as the companies have had to hunker down in the face of possible sequestration. Traders should keep their eyes on the following four stocks during upcoming trading sessions.
On Wednesday before the opening bell, Lockheed Martin Corporation (NYSE:LMT) will unveil the results of its Q3. The consensus among analysts is that the defense contractor will post EPS of $1.85 versus $1.99 in the prior year quarter. Total revenue is expected to drop by 7.8% on a year-over-year basis.
Lockheed shares are in a great place from a technical standpoint. The 50-day moving average has remained above the 200-day moving average for all of 2012 as the stock has advanced 14.8% on the year.
Also slated to report its Q3 results on Wednesday morning is Northrop Grumman Corporation (NYSE:NOC). Wall Street is calling for the company to announce EPS of $1.69 versus $1.86 in the year-ago quarter. Total revenue is expected to slide to the tune of 4.1%.
Northrop shares got off to a slower start than LMT shares in 2012, but have since turned up the heat and are now up 20.2% since the beginning of the year. I expect the company to top estimates and the stock will continue to edge higher.
Another heavy hitter in the defense contractor space set to announce its Q3 results on Wednesday morning is General Dynamics Corporation (NYSE:GD). Analysts are predicting that the company will post EPS of $1.78 versus $1.83 in the prior year quarter. Total revenue is expected to increase by 2.4%.
The tape on this stock has been underwhelming. GD shares are up 1.1% on the year. I'm not expecting the company's earnings to have a significant impact on the stock price, but the 3.0% dividend yield is appealing. The stock is a sound play for income investors.
One other stock for traders to keep an eye on in the coming days is Raytheon Company (NYSE:RTN). The company will release the results of its Q3 on Thursday morning. Analysts are expecting EPS of $1.27 compared with $1.43 in the year-ago quarter. Total revenue is expected to tick up by 0.5%.
The company has surprised to the upside in each of the last four quarters and it would not be surprising to see the trend continue. The 50-day moving average has held strong above the 200-day moving average for much of this year. I like the stock heading into earnings.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: By Billy Fisher, Stock Traders Daily.