Q1 Earnings Outperformers: General Dynamics (NYSE:GD) And The Rest Of The Defense Contractors Stocks
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 13 defense contractors stocks we track reported a strong Q1. As a group, revenues beat analysts' consensus estimates by 1.6% while next quarter's revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 1.1% on average since the latest earnings results.
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 $12.22 billion, up 13.9% year on year. This print exceeded analysts' expectations by 1.8%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts' adjusted operating income estimates but a significant miss of analysts' backlog estimates.
"We continue to see steady growth and improvement in operating performance across the defense portfolio," said Phebe Novakovic, chairman and chief executive officer "The Aerospace segment saw a significant increase in profitability, reflecting the manufacturing efficiencies associated with reaching higher levels of production on our new aircraft models."
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $271.90.
Is now the time to buy General Dynamics? Access our full analysis of the earnings results here, it's free.
Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Leidos reported revenues of $4.25 billion, up 6.8% year on year, outperforming analysts' expectations by 3.6%. The business had a very strong quarter with an impressive beat of analysts' backlog and EBITDA estimates.
The market seems happy with the results as the stock is up 5.2% since reporting. It currently trades at $155.50.
Is now the time to buy Leidos? Access our full analysis of the earnings results here, it's free.
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE:NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Northrop Grumman reported revenues of $9.47 billion, down 6.6% year on year, falling short of analysts' expectations by 4.7%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts' expectations.
Northrop Grumman delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 9.2% since the results and currently trades at $482.
Read our full analysis of Northrop Grumman's results here.
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 $20.31 billion, up 5.2% year on year. This print topped analysts' expectations by 1.7%. Overall, it was a strong quarter as it also logged an impressive beat of analysts' EBITDA estimates.
The stock is up 2% since reporting and currently trades at $128.49.
Read our full, actionable report on RTX here, it's free.
Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ:DRS) is a provider of defense systems, electronics, and military support services.
Leonardo DRS reported revenues of $799 million, up 16.1% year on year. This number beat analysts' expectations by 9.2%. It was a very strong quarter as it also recorded a solid beat of analysts' adjusted operating income estimates and an impressive beat of analysts' EPS estimates.
Leonardo DRS scored the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 11.7% since reporting and currently trades at $41.27.
Read our full, actionable report on Leonardo DRS here, it's free.
In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump's presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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Dividend DeclaredOn July 24, 2025, Ovintiv's Board declared a quarterly dividend of $0.30 per share of common stock payable on September 29, 2025, to shareholders of record as of September 15, 2025. Asset Highlights PermianPermian production averaged 215 MBOE/d (80% liquids) in the second quarter. The Company had 23 net wells turned in line ("TIL"). Full year capital investment in the play is expected to total approximately $1.20 billion to $1.25 billion to bring on 130 to 140 net wells. Montney Montney production averaged 300 MBOE/d (26% liquids) in the second quarter. The Company had 39 net wells TIL. Full year capital investment in the play is expected to total approximately $575 million to $625 million to bring on 75 to 85 net wells. AnadarkoAnadarko production averaged 100 MBOE/d (59% liquids) in the second quarter. The Company had 11 net wells TIL. Full year capital investment in the play is expected to total approximately $290 million to $310 million to bring on 25 to 35 net wells. For additional information on the Company's quarterly results, please refer to the Second Quarter 2025 Results Presentation available on Ovintiv's website, under Presentations and Events – Ovintiv. Supplemental Information, and Non-GAAP Definitions and Reconciliations, are available on Ovintiv's website under Financial Documents Library. Conference Call InformationA conference call and webcast to discuss the Company's second quarter results will be held at 8:00 a.m. MT (10:00 a.m. ET) on July 25, 2025. To join the conference call without operator assistance, you may register and enter your phone number at to receive an instant automated call back. You can also dial direct to be entered to the call by an Operator. Please dial 888-510-2154 (toll-free in North America) or 437-900-0527 (international) approximately 15 minutes prior to the call. The live audio webcast of the conference call, including slides and financial statements, will be available on Ovintiv's website, under Investors/Presentations and Events. The webcast will be archived for approximately 90 days. Refer to Note 1 Non-GAAP measures and the tables in this release for reconciliation to comparable GAAP financial measures. Capital Investment and Production (for the period ended June 30) 2Q 2025 2Q 2024 Capital Expenditures (1) ($ millions) 521 622 Oil (Mbbls/d) 142.0 167.3 NGLs – Plant Condensate (Mbbls/d) 69.2 44.6 Oil & Plant Condensate (Mbbls/d) 211.2 211.9 NGLs – Other (Mbbls/d) 95.5 92.0 Total Liquids (Mbbls/d) 306.7 303.9 Natural gas (MMcf/d) 1,851 1,740 Total production (MBOE/d) 615.3 593.8 (1) Including capitalized directly attributable internal costs. Second Quarter Financial Summary (for the period ended June 30) ($ millions) 2Q 2025 2Q 2024 Cash From (Used In) Operating Activities Deduct (Add Back): Net change in other assets and liabilities Net change in non-cash working capital 1,013 (11) 111 1,020 (42) 37 Non-GAAP Cash Flow (1) 913 1,025Non-GAAP Cash Flow (1) 913 1,025 Less: Capital Expenditures (2) 521 622 Non-GAAP Free Cash Flow (1) 392 403Net Earnings (Loss) Before Income Tax Before-tax (Addition) Deduction: Unrealized gain (loss) on risk management Non-operating foreign exchange gain (loss) 399 54 (3) 466 8 11 Adjusted Earnings (Loss) Before Income Tax Income tax expense (recovery) 348 83 447 116 Non-GAAP Adjusted Earnings (1) 265 331 (1) Non-GAAP Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Adjusted Earnings are non-GAAP measures as defined in Note 1. (2) Including capitalized directly attributable internal costs. Realized Pricing Summary (Including the impact of realized gains (losses) on risk management) (for the period ended June 30) 2Q 2025 2Q 2024 Liquids ($/bbl) WTI 63.74 80.57 Realized Liquids Prices Oil 65.23 76.58 NGLs – Plant Condensate 60.79 71.66 Oil & Plant Condensate 63.77 75.55 NGLs – Other 18.28 18.47 Total NGLs 36.14 35.82Natural Gas NYMEX ($/MMBtu) 3.44 1.89 Realized Natural Gas Price ($/Mcf) 2.38 1.86 Cost Summary (for the period ended June 30) ($/BOE) 2Q 2025 2Q 2024 Production, mineral and other taxes 1.31 1.65 Upstream transportation and processing 7.62 7.15 Upstream operating 3.84 4.29 Administrative, excluding long-term incentive, restructuring and legal costs 1.19 1.28 Debt to EBITDA (1) ($ millions, except as indicated) June 30, 2025 December 31, 2024 Long-Term Debt, including Current Portion 5,333 5,453Net Earnings (Loss) 595 1,125 Add back (Deduct): Depreciation, depletion and amortization 2,245 2,290 Interest 401 412 Income tax expense (recovery) 68 226 EBITDA 3,309 4,053 Debt to EBITDA (times) 1.6 1.3 1) Debt to EBITDA is a non-GAAP measure as defined in Note 1. Debt to Adjusted EBITDA (1) ($ millions, except as indicated) June 30, 2025 December 31, 2024 Long-Term Debt, including Current Portion 5,333 5,453Net Earnings (Loss) 595 1,125 Add back (Deduct): Depreciation, depletion and amortization Impairments 2,245 1,180 2,290 450 Accretion of asset retirement obligation 24 19 Interest 401 412 Unrealized (gains) losses on risk management 36 136 Foreign exchange (gain) loss, net 51 (19) Other (gains) losses, net (164) (165) Income tax expense (recovery) 68 226 Adjusted EBITDA 4,436 4,474 Debt to Adjusted EBITDA (times) 1.2 1.2 1) Debt to Adjusted EBITDA is a non-GAAP measure as defined in Note 1. Hedge Details as of June 30, 2025 Oil and Condensate Hedges ($/bbl) 3Q 2025 4Q 2025 1Q 2026 2Q 2026 3Q 2026 4Q 2026 2027 2028 WTI 3-Way OptionsCall Strike Put Strike Sold Put Strike 50 Mbbls/d $80.59 $65.00 $50.00 50 Mbbls/d $76.57 $65.00 $50.00 45 Mbbls/d $72.32 $62.01 $51.67 25 Mbbls/d $70.68 $62.42 $52.00 0 - - - 0 - - - 0 - - - 0 - - - Natural Gas Hedges ($/Mcf) 3Q 2025 4Q 2025 1Q 2026 2Q 2026 3Q 2026 4Q 2026 2027 2028 NYMEX 3-Way OptionsCall Strike Put Strike Sold Put Strike 500 MMcf/d $4.47 $3.00 $2.25 500 MMcf/d $4.47 $3.00 $2.25 500 MMcf/d $7.95 $3.33 $2.70 450 MMcf/d $5.92 $3.33 $2.58 450 MMcf/d $5.92 $3.33 $2.58 450 MMcf/d $5.92 $3.33 $2.58 0 - - - 0 - - - AECO Nominal Basis Swaps 190 MMcf/d ($1.08) 190 MMcf/d ($1.08) 0 - 0 - 0 - 0 - 20 MMcf/d ($1.38) 20 MMcf/d ($1.38) AECO % of NYMEX Swaps 100 MMcf/d 72% 100 MMcf/d 72% 0 - 0 - 0 - 0 - 0 - 0 - AECO Fixed Price Swaps 0 - 0 - 50 MMcf/d $2.35 50 MMcf/d $2.35 50 MMcf/d $2.35 50 MMcf/d $2.35 0 - 0 - Important informationOvintiv reports in U.S. dollars unless otherwise noted. Production, sales and reserves estimates are reported on an after-royalties basis, unless otherwise noted. Unless otherwise specified or the context otherwise requires, references to "Ovintiv," "we," "its," "our" or to "the Company" includes reference to subsidiaries of and partnership interests held by Ovintiv Inc. and its subsidiaries. Please visit Ovintiv's website and Investor Relations page at and where Ovintiv often discloses important information about the Company, its business, and its results of operations. NI 51-101 ExemptionThe Canadian securities regulatory authorities have issued a decision document (the "Decision") granting Ovintiv exemptive relief from the requirements contained in Canada's National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). As a result of the Decision, and provided that certain conditions set out in the Decision are met on an on-going basis, Ovintiv will not be required to comply with the Canadian requirements of NI 51-101 and the Canadian Oil and Gas Evaluation Handbook. The Decision permits Ovintiv to provide disclosure in respect of its oil and gas activities in the form permitted by, and in accordance with, the legal requirements imposed by the U.S. Securities and Exchange Commission ("SEC"), the Securities Act of 1933, the Securities and Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules of the NYSE. The Decision also provides that Ovintiv is required to file all such oil and gas disclosures with the Canadian securities regulatory authorities on as soon as practicable after such disclosure is filed with the SEC. NOTE 1: Non-GAAP Measures Certain measures in this news release do not have any standardized meaning as prescribed by U.S. GAAP and, therefore, are considered non-GAAP measures. These measures may not be comparable to similar measures presented by other companies and should not be viewed as a substitute for measures reported under U.S. GAAP. These measures are commonly used in the oil and gas industry and/or by Ovintiv to provide shareholders and potential investors with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. For additional information regarding non-GAAP measures, see the Company's website. This news release contains references to non-GAAP measures as follows: Non-GAAP Cash Flow is a non-GAAP measure defined as cash from (used in) operating activities excluding net change in other assets and liabilities, and net change in non-cash working capital. Non-GAAP Free Cash Flow is a non-GAAP measure defined as Non-GAAP Cash Flow in excess of capital expenditures, excluding net acquisitions and divestitures. Forecasted Non-GAAP Free Cash Flow assumes forecasted Non-GAAP Cash Flow based on price assumptions of $60 WTI and $3.75 NYMEX and utilizes the midpoint of the production and capital guidance. Due to its forward-looking nature, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measure, such as changes in operating assets and liabilities. Accordingly, Ovintiv is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measure. Amounts excluded from this non-GAAP measure in future periods could be significant. Non-GAAP Adjusted Earnings is a non-GAAP measure defined as net earnings (loss) excluding non-cash items that the Company's management believes reduces the comparability of the Company's financial performance between periods. These items may include, but are not limited to, unrealized gains/losses on risk management, impairments, non-operating foreign exchange gains/losses, and gains/losses on divestitures. Income taxes includes adjustments to normalize the effect of income taxes calculated using the estimated annual effective income tax rate. In addition, any valuation allowances are excluded in the calculation of income taxes. Adjusted EBITDA, Debt to EBITDA and Debt to Adjusted EBITDA (Leverage Target/Ratio) are non-GAAP measures. EBITDA is defined as trailing 12-month net earnings (loss) before income taxes, depreciation, depletion and amortization, and interest. Adjusted EBITDA is EBITDA adjusted for impairments, accretion of asset retirement obligation, unrealized gains/losses on risk management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses. Debt to EBITDA is calculated as long-term debt, including the current portion, divided by EBITDA. Debt to Adjusted EBITDA is calculated as long-term debt, including the current portion, divided by Adjusted EBITDA. Adjusted EBITDA, Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures monitored by management as indicators of the Company's overall financial strength. Net Debt is a non-GAAP measure defined as long-term debt, including the current portion, less cash and cash equivalents. ADVISORY REGARDING OIL AND GAS INFORMATION – The conversion of natural gas volumes to barrels of oil equivalent (BOE) is on the basis of six thousand cubic feet to one barrel. BOE is based on a generic energy equivalency conversion method primarily applicable at the burner tip and does not represent economic value equivalency at the wellhead. Readers are cautioned that BOE may be misleading, particularly if used in isolation. ADVISORY REGARDING FORWARD-LOOKING STATEMENTS – This news release contains forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, except for statements of historical fact, that relate to the anticipated future activities, plans, strategies, objectives or expectations of the Company, including second quarter and fiscal year 2025 guidance and expected free cash flow, the expectation of delivering sustainable durable returns to shareholders in future years, plans regarding capital allocation, share buybacks and debt reduction, the ability of the Company to timely achieve its stated environmental, social and governance goals, targets and initiatives, the anticipated timing of bringing wells online, and the ability to achieve targeted per well cost reduction synergies, are forward-looking statements. When used in this news release, the use of words and phrases including "anticipates," "believes," "continue," "could," "estimates," "expects," "focused on," "forecast," "guidance," "intends," "maintain," "may," "on track", "opportunities," "outlook," "plans," "potential," "strategy," "targets," "will," "would" and other similar terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words or phrases. Readers are cautioned against unduly relying on forward-looking statements which, are based on current expectations and by their nature, involve numerous assumptions that are subject to both known and unknown risks and uncertainties (many of which are beyond our control) that may cause such statements not to occur, or actual results to differ materially and/or adversely from those expressed or implied. These assumptions include, without limitation: future commodity prices and basis differentials; the Company's ability to successfully integrate the Montney assets; the ability of the Company to access credit facilities and capital markets; the availability of attractive commodity or financial hedges and the enforceability of risk management programs; the Company's ability to capture and maintain gains in productivity and efficiency; the ability for the Company to generate cash returns and execute on its share buyback plan; expectations of plans, strategies and objectives of the Company, including anticipated production volumes and capital investment; the Company's ability to manage cost inflation and expected cost structures, including expected operating, transportation, processing and labor expenses; the outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment; the impact of changes in federal, state, provincial, local and tribal laws, rules and regulations, including the impact of changes in trade policies and tariffs; and projections made in light of, and generally consistent with, the Company's historical experience and its perception of historical industry trends; and the other assumptions contained herein. Although the Company believes the expectations represented by its forward-looking statements are reasonable based on the information available to it as of the date such statements are made, forward-looking statements are only predictions and statements of our current beliefs and there can be no assurance that such expectations will prove to be correct. All forward-looking statements contained in this news release are made as of the date of this news release and, except as required by law, the Company undertakes no obligation to update publicly; revise or keep current any forward-looking statements. The forward-looking statements contained or incorporated by reference in this news release, and all subsequent forward-looking statements attributable to the Company, whether written or oral, are expressly qualified by these cautionary statements. The reader should carefully read the risk factors described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other filings with the SEC or Canadian securities regulators, for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. Other unpredictable or unknown factors not discussed in this news release could also have material adverse effects on forward-looking statements. Further information on Ovintiv Inc. is available on the Company's website, or by contacting: Investor contact: (888) 525-0304 Media contact: (403) 645-2252 View original content to download multimedia: SOURCE Ovintiv Inc. View original content to download multimedia: Sign in to access your portfolio
