Q2 Rundown: ICF (NASDAQ:ICFI) Vs Other Defense Contractors Stocks

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how ICF (NASDAQ:ICFI) and the rest of the defense contractors stocks fared in Q2.

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

The 15 defense contractors stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.7% while next quarter’s revenue guidance was 6.7% below.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. Thankfully, defense contractors stocks have been resilient with share prices up 5.3% on average since the latest earnings results.

ICF (NASDAQ:ICFI)

Originally founded as Inner City Fund, ICF International (NASDAQ:ICFI) delivers consulting and technology services in health, environment, and infrastructure.

ICF reported revenues of $512 million, up 2.4% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ earnings estimates.

Interestingly, the stock is up 11.8% since reporting and currently trades at $162.68.

Is now the time to buy ICF? Access our full analysis of the earnings results here, it’s free.

Best Q2: Mercury Systems (NASDAQ:MRCY)

Founded in 1981, Mercury Systems (NASDAQ:MRCY) specializes in providing processing subsystems and components for primarily defense applications.

Mercury Systems reported revenues of $248.6 million, down 1.8% year on year, outperforming analysts’ expectations by 7.8%. The business had an incredible quarter with an impressive beat of analysts’ organic revenue and earnings estimates.

The market seems happy with the results as the stock is up 5.8% since reporting. It currently trades at $35.97.

Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: General Dynamics (NYSE:GD)

Creator of the famous M1 Abrahms tank, General Dynamics (NYSE:GD) develops aerospace, marine systems, combat systems, and information technology products.

General Dynamics reported revenues of $11.98 billion, up 18% year on year, exceeding analysts’ expectations by 4.1%. Still, it was a slower quarter as it posted a miss of analysts’ backlog sales estimates.

Interestingly, the stock is up 2.6% since the results and currently trades at $302.01.

Read our full analysis of General Dynamics’s results here.

RTX (NYSE:RTX)

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

RTX reported revenues of $19.72 billion, up 7.7% year on year. This print topped analysts’ expectations by 2.3%. It was a very strong quarter as it also logged an impressive beat of analysts’ organic revenue estimates.

The stock is up 14.7% since reporting and currently trades at $120.26.

Read our full, actionable report on RTX here, it’s free.

CACI (NYSE:CACI)

Founded to commercialize SIMSCRIPT, CACI International (NYSE:CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.

CACI reported revenues of $2.04 billion, up 19.7% year on year. This number topped analysts’ expectations by 5.5%. It was an exceptional quarter as it also recorded an impressive beat of analysts’ backlog sales estimates.

The stock is up 5.4% since reporting and currently trades at $470.31.

Read our full, actionable report on CACI here, it’s free.

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