Defense cuts come at a bad time for defense contractors

The $42.7 billion sequestration cuts related to defense - scheduled to take effect Friday - come at a bad time for certain defense contractors that have failed to post strong sales growth in the past three years. The average revenue growth for Lockheed Martin, Northrop Grumman, Raytheon and General Dynamics over the last three years has been -1.9%. The only firm to post revenue growth greater than 2% during that time was Lockheed - which grew sales by 3.8% in 2010. However, some analysts believe that stocks in the sector are cheap and prices reflect anticipated revenue cuts. A Bloomberg story published Friday noted that put calls on General Dynamics and Lockheed Martin are at their cheapest levels in 18 months.

Related Articles
Lockheed Martin contributes $1.5 billion to pension funds
General Dynamics eyes $550 million in 2014 pension contributions
Raytheon expects to contribute $875 million to pension funds in 2014
Northrop Grumman charts $577 million in U.S. pension contributions for 2015
Northrop Grumman to contribute $79 million to U.S. pension plans in 2016
Recommended for You
Stacked blocks that have DEI on the side and Diversity, Equity and Inclusion written on the front.
Anti-DEI push comes, and progress plateaus
Harvard University’s large endowment could buffer federal government cuts
Harvard University’s large endowment could buffer federal government cuts
Most pension plans are overallocated to private equity
Most pension plans are overallocated to private equity