Early Earnings

Military contractors will probably say that defense orders are "likely" to be "soft" in the near future when they hold their quarterly earnings conference calls later on this month, according to a preview published this morning by Wall Street analysis firm Credit Suisse:

We expect March's triggering of Sequester to have dramatically slowed order flow towards the end of the quarter. At our Pentagon conference in March, several DOD officials said order flow had slowed considerably since Sequester's trigger, adding that in some departments order activity had stopped completely. Thus, while EPS numbers for long-cycle defense contractors should be in-line or above consensus on previously booked business and margins, an order shortfall could drive some volatility. For some companies, such as [Huntington Ingalls Industries], the Continuing Resolution was a bigger overhang in 2013 than was Sequester. Now that the CR is resolved, we would look for an update from such companies on visibility into year-end.

Huntington Ingalls plans to hold its earnings conference call on May 8. As for the traditional "big five," Lockheed Martin plans to hold its earnings conference call on April 23; Boeing, Northrop Grumman and General Dynamics on April 24; and Raytheon on April 25.