Executive Mosaic’s GovCon Index hardly moved midweek, finishing at $4,609.33. Despite Wall Street’s modest gains, the broad S&P 500 (+0.24%) notched a new record close. The Federal Open Market Committee’s January meeting minutes showed policymakers support delaying rate cuts because of inflation risks.
Gainers and Decliners Split
The GovCon Index was flat as gainers and decliners were even-steven, 15-15. Curtiss-Wright (NYSE: CW) and HII (NYSE: HII) topped the winning side. Parsons (NYSE: PSN) and Palantir Technologies (Nasdaq: PLTR) plunged -11.46% and -10.08%, respectively, to lead the losers.
HII has risen +9% since reporting its Q4 and full-year 2024 results on Feb. 5. The shipbuilder’s sales and service revenues increased 1% year-over-year to $11.53 billion, while net earnings declined -19% to $550 million compared to 2023. Chris Kastner, president and CEO of HII, said the undelivered ships contracted pre-COVID dragged the financial results. However, Kastner assured they are getting smaller and the majority should be completed by 2027.
Parsons reported record revenues of $1.73 billion and $6.75 billion in Q4 and full-year 2024, although they were lower than Wall Street estimates. However, in the same periods, net income attributable to Parsons rose 21% and 46% year-over-year to $54.2 million and $235 million. Besides the 15 contracts worth more than $100 million each won last year, cash flow from operations climbed 28% to a record $524 million from a year ago.
Due to the possible Department of Defense budget cuts, Palantir Technologies tanked and ended its four-day winning streak. The software and data analytics firm relies on government and defense contracts for business growth. Published reports say Alex Karp, CEO of Palantir, plans to sell 48.9 million PLTR shares worth $1.23 billion.
Also, on Wednesday, the U.S. Navy awarded RTX (NYSE: RTX) a $186 million cost-plus-incentive-fee contract. The contract will provide material and support equipment for depot maintenance facilities and program administration for non-recurring sustainment activities, including unit-level support equipment to sustain the F135 engines in F-35 Joint Strike Fighter aircraft.
Latest Headwind
The Washington Post obtained a memo that said DOD secretary Pete Hegseth had instructed top Pentagon and U.S. military officials to draw up plans to reduce the defense budget by 8% annually over the next five years. This directive is a headwind for the index representing the government contracting sector.
Market Summary
| Index | Price | Net Change | % Change |
|---|---|---|---|
| GovCon Index Daily Average | 4,609.33 | 0.17 | 0.00% |
| Dow Jones Industrial Average | 44,627.59 | 71.25 | 0.16% |
| NASDAQ | 20,056.25 | 14.99 | 0.07% |
Top 5 GovCon Index Daily Percentage Performers
| Symbol | Price | Net Change | % Change |
|---|---|---|---|
| CW | 335.58 | 10.02 | 3.08% |
| HII | 173.77 | 4.06 | 2.39% |
| AVAV | 158.84 | 3.54 | 2.28% |
| CACI | 344.51 | 5.37 | 1.58% |
| HON | 210.81 | 2.77 | 1.33% |
Top 5 GovCon Index Daily Net Performers
| Symbol | Price | Net Change | % Change |
|---|---|---|---|
| CW | 335.58 | 10.02 | 3.08% |
| CACI | 344.51 | 5.37 | 1.58% |
| LMT | 432.95 | 4.41 | 1.03% |
| HII | 173.77 | 4.06 | 2.39% |
| AVAV | 158.84 | 3.54 | 2.28% |
Top 5 GovCon Index Daily Percentage Decliners
| Symbol | Price | Net Change | % Change |
|---|---|---|---|
| PSN | 65.08 | -8.42 | -11.46% |
| PLTR | 112.06 | -12.56 | -10.08% |
| ICFI | 101.8 | -2.28 | -2.19% |
| NOC | 433.45 | -7.91 | -1.79% |
| CG | 52.51 | -0.94 | -1.76% |
