Dj L3Harris Technologies Inc. Stock Underperforms Thursday When Compared To Competitors

The S&P 500 Index Thursday closed down -0.60%, the Dow Jones Industrials Index closed down -0.47%, and the Nasdaq 100 Index closed down -0.66%.

Stocks retreated on Thursday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 falling to 1-week lows. Stocks got knocked back Thursday after hawkish comments from Fed Chair Powell reduced the chances of a Fed rate cut next month to 59% from 82% when he said there is no need to hurry interest rate cuts with the US economy strong. Stocks were already on the defensive Thursday as signs of strength in US economic news may keep the Fed from aggressively cutting interest rates. The 10-year T-note yield rose to a 4-1/2 month high Thursday after weekly initial unemployment claims fell more than expected to a 5-1/2 month low, and October producer prices rose more than expected, hawkish factors for Fed policy.

Some positive corporate news on Thursday was supportive of stocks. Walt Disney closed up more than +6% after reporting better-than-expected Q4 adjusted EPS and raising its adjusted EPS growth forecast for fiscal 2025. Also, airline stocks rallied Thursday after Barclays said a convergence in improving fundamentals and investor sentiment may drive a “powerful” rally for airline stocks next year.

US weekly initial unemployment claims fell -4,000 to a 5-1/2 month low of 217,000, showing a stronger labor market than expectations of 220,000.

US Oct PPI final demand rose +2.4% y/y, stronger than expectations of +2.3% y/y. Oct PPI ex-food and energy rose +3.1% y/y, stronger than expectations of +3.0% y/y.

Fed Chair Powell said the US economy's recent performance has been "remarkably good," and "is not sending any signal that we need to be in a hurry to lower interest rates."

Stocks have rallied sharply over the past week, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new record highs on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation.

The markets are looking ahead to Friday’s report on retail sales to see if consumer spending is holding up. Oct retail sales are expected to be up +0.3% m/m, and Oct retail sales ex-autos are also expected to be up +0.3% m/m. In addition, the Q3 earnings season is wrapping up, with more than 50 companies scheduled to report quarterly results this week.

Of the 85% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average. According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.4% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 59% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets Thursday settled mixed. The Euro Stoxx 50 closed up +1.97%. China's Shanghai Composite Index closed down -1.73%. Japan's Nikkei Stock 225 fell to a 1-week low and closed down -0.48%.

Interest Rates

December 10-year T-notes (ZNZ24) Thursday closed up +4 ticks. The 10-year T-note yield fell -0.2 bp to 4.449%. Dec T-notes Thursday recovered from a 4-1/2 month low and posted modest gains, and the 10-year T-note yield fell back from a 4-1/2 month high of 4.481%. Short covering emerged in T-notes Thursday on carryover strength in German bunds after the dovish account of the ECB’s Oct 16-17 policy meeting sparked a rally in 10-year German bunds.

However, T-notes gave up most of their gains late Thursday on hawkish comments from Fed Chair Powell, who said the FOMC is in no hurry to lower interest rates. T-notes were also under pressure Thursday from US economic news that showed Oct producer prices rose more than expected, and after weekly jobless claims fell more than expected to a 5-1/2 month low, hawkish factors for Fed policy.

European government bond yields Thursday moved lower. The 10-year German bund yield fell -4.9 bp to 2.341%. The 10-year UK gilt yield fell -3.7 bp to 4.483%.

Eurozone Sep industrial production fell -2.0% m/m, weaker than expectations of -1.4% m/m and the biggest decline in 8 months.

ECB Vice President Guindos said the economic "recovery we were anticipating in the Eurozone is not happening with the intensity we expected."

The account of the ECB's Oct 16-17 meeting was seen as dovish as policymakers see inflation continuing to decline, saying "there was wide agreement that the incoming data since the September meeting had increased confidence in an ongoing disinflation process and that inflation would converge to the medium-term target."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 27% for a -50 bp rate cut at the same meeting.

US Stock Movers

Stocks with big government contracts were under pressure Thursday after President-elect Trump named Elon Musk and Vivek Ramaswamy to lead a government spending cut commission called the Department of Government Efficiency. As a result, Leidos Holdings closed down more than -13% to lead losers in the S&P 500, and General Dynamics closed down more than -6%. Also, L3Harris Technologies closed down more than -5%, and Huntington Ingalls Industries closed down more than -4%. In addition, RTX Corp , Northrop Gruman , and Lockheed Martin closed down more than -3%.

Super Micro Computer closed down more than -11% to lead losers in the Nasdaq 100 after the company delayed another quarterly 10-Q filing as it continued to search for a new accounting firm.

Hims & Hers Health closed down more than -24% after Amazon.com said it launched a competing telehealth offering for its prime members.

Ibotta closed down more than -12% after forecasting Q4 revenue of $100 million-$106 million, below the consensus of $1110.38 million.

Tetra Tech closed down more than -13% after forecasting 2025 net revenue of $4.57 billion-$4.77 billion, the midpoint below the consensus of $4.68 billion.

Papa John’s International closed down more than -2% after KeyBanc Capital Markets downgraded the stock to sector weight from overweight.

Cisco Systems closed down more than -1% after forecasting 2025 revenue of $55.3 billion-$56.3 billion, the midpoint below the consensus of $55.88 billion.

Kilroy Realty closed down more than -1% after Scotiabank downgraded the stock to underperform from sector perform with a price target of $38.

Walt Disney closed up more than +6% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $1.14, above the consensus of $1.10, and said it sees high-single-digit adjusted EPS growth in fiscal 2025, above the consensus of +4%.

Tapestry closed up more than +12% to lead gainers in the S&P 500 after announcing it ended a $8.5 billion planned merger with Capri Holdings Ltd due to US antitrust regulators’ objections.

Chip stocks moved higher Thursday after ASML Holding NV affirmed its long-term guidance and pledged “growing dividends and share buybacks.” As a result, ASML Holding NV and Qualcomm closed up more than +2%. Also, Lam Research and Applied Materials closed up more than +1%. In addition, GlobalFoundries closed up +0.80%, and Marvell Technology closed up +0.70%.

Airline stocks rose Thursday after Barclays said a convergence in improving fundamentals and investor sentiment may drive a “powerful” rally for airline stocks next year. As a result, American Airlines Group , Alaska Air Group , Delta Air Lines , and United Airlines Holdings closed up more than +1%.

Beazer Homes USA closed up more than +8% after reporting Q4 revenue of $806.2 million, stronger than the consensus of $777.8 million.

Wynn Resorts Ltd closed up more than +8% after a 13D filing showed billionaire Tilman Fertitta reported a 9.9% stake in the company.

CNH Industrial NV closed up more than +6% after activist investor David Einhorn revealed a new position in the company.

Charles Schwab closed up more than +2% after reporting core new net assets brought to the company by new and existing clients for October was $24.6 billion.

Earnings Reports (11/15/2024)

Actinium Pharmaceuticals Inc (ATNM), Airship AI Holdings Inc (AISP), Compass Minerals International (CMP), Greenwich Lifesciences Inc (GLSI), Haynes International Inc (HAYN), Inhibrx Biosciences Inc (INBX), Lifezone Metals Ltd (LZM), NANO Nuclear Energy Inc (NNE), Solidion Technology Inc (STI), Spectrum Brands Holdings Inc (SPB).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

The S&P 500 Index today is down -0.12%, the Dow Jones Industrials Index is down -0.04%, and the Nasdaq 100 Index is down -0.19%.

Stocks today are mostly lower on long liquidation ahead of this afternoon’s speech from Fed Chair Powell. Also, some profit-taking is weighing on stocks as today’s strength in US economic news may keep the Fed from aggressively cutting interest rates. The 10-year T-note yield rose to a 4-1/2 month high today before turning lower after weekly initial unemployment claims fell more than expected to a 5-1/2 month low, and October producer prices rose more than expected, hawkish factors for Fed policy.

Some positive corporate news today is bullish for stocks. Walt Disney is up more than +7% after reporting better-than-expected Q4 adjusted EPS and raising its adjusted EPS growth forecast for fiscal 2025. Also, chip stocks are climbing today after ASML Holding NV affirmed its long-term guidance. In addition, airline stocks are moving higher today, as Barclays said a convergence in improving fundamentals and investor sentiment may drive a “powerful” rally for airline stocks next year.

US weekly initial unemployment claims fell -4,000 to a 5-1/2 month low of 217,000, showing a stronger labor market than expectations of 220,000.

US Oct PPI final demand rose +2.4% y/y, stronger than expectations of +2.3% y/y. Oct PPI ex-food and energy rose +3.1% y/y, stronger than expectations of +3.0% y/y.

Stocks have rallied sharply over the past week, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new record highs on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation.

The markets are looking ahead to today’s comments from Fed Chair Powell, who will speak on the economic outlook this afternoon at an event at the Dallas Fed. Also, Friday’s report on retail sales will be looked at to see if consumer spending is holding up. Oct retail sales are expected to be up +0.3% m/m, and Oct retail sales ex-autos are also expected to be up +0.3% m/m. In addition, the Q3 earnings season is wrapping up, with more than 50 companies scheduled to report quarterly results this week.

Of the 85% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average. According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.4% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 76% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are mixed. The Euro Stoxx 50 is up +1.90%. China's Shanghai Composite Index closed down -1.73%. Japan's Nikkei Stock 225 fell to a 1-week low and closed down -0.48%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up +3 ticks. The 10-year T-note yield is down -2.0 bp to 4.432%. Dec T-notes today recovered from a 4-1/2 month low and moved higher, and the 10-year T-note yield fell back from a 4-1/2 month high of 4.481%. Short covering emerged in T-notes today on carryover strength in German bunds after the dovish account of the ECB’s Oct 16-17 policy meeting sparked a rally in 10-year German bunds.

T-notes today initially moved lower on US economic news that showed Oct producer prices rose more than expected, and after weekly jobless claims fell more than expected to a 5-1/2 month low, hawkish factors for Fed policy. Also, anticipation that President-elect Trump’s pro-growth policies could quicken inflation continues to weigh on T-note prices.

European government bond yields today are mixed. The 10-year German bund yield is down -3.0 bp to 2.360%. The 10-year UK gilt yield is down -2.2 bp to 4.498%.

Eurozone Sep industrial production fell -2.0% m/m, weaker than expectations of -1.4% m/m and the biggest decline in 8 months.

ECB Vice President Guindos said the economic "recovery we were anticipating in the Eurozone is not happening with the intensity we expected."

The account of the ECB's Oct 16-17 meeting was seen as dovish as policymakers see inflation continuing to decline, saying "there was wide agreement that the incoming data since the September meeting had increased confidence in an ongoing disinflation process and that inflation would converge to the medium-term target."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 27% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer is down more than -8% to lead losers in the S&P 500 and Nasdaq 100 after the company delayed another quarterly 10-Q filing as it continue to search for a new accounting firm.

Stocks with big government contracts are under pressure today after President-elect Trump named Elon Musk and Vivek Ramaswamy to lead a government spending cut commission called the Department of Government Efficiency. As a result, Leidos Holdings is down more than -5%, and L3Harris Technologies is down more than -4%. Also, General Dynamics and RTX Corp are down more than -3%. In addition, Northrop Gruman , Lockheed Martin , and Huntington Ingalls Industries are down more than -2%.

Cisco Systems is down more than -2% to lead losers in the Dow Jones Industrials after forecasting 2025 revenue of $55.3 billion-$56.3 billion, the midpoint below the consensus of $55.88 billion.

Ibotta is down more than -15% after forecasting Q4 revenue of $100 million-$106 million, below the consensus of $1110.38 million.

Tetra Tech is down more than -9% after forecasting 2025 net revenue of $4.57 billion-$4.77 billion, the midpoint below the consensus of $4.68 billion.

Papa John’s International is down more than -3% after KeyBanc Capital Markets downgraded the stock to sector weight from overweight.

Kilroy Realty is down more than -1% after Scotiabank downgraded the stock to underperform from sector perform with a price target of $38.

Walt Disney is up more than +7% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $1.14, above the consensus of $1.10 and said it sees high-single-digit adjusted EPS growth in fiscal 2025, above the consensus of +4%.

Tapestry is up more than +12% to lead gainers in the S&P 500 after announcing it ended a $8.5 billion planned merger with Capri Holdings Ltd due to US antitrust regulators’ objections.

Chip stocks are moving higher today after ASML Holding NV affirmed its long-term guidance and pledged “growing dividends and share buybacks.” As a result, ASML Holding NV is up more than +5% to lead gainers in the Nasdaq 100, and Qualcomm is up more than -2%. Also, Nvidia , Applied Materials , Lam Research , Marvell Technology , and Intel are up more than +1%.

Airline stocks are climbing today after Barclays said a convergence in improving fundamentals and investor sentiment may drive a “powerful” rally for airline stocks next year. As a result, American Airlines Group , Alaska Air Group , Delta Air Lines , Southwest Airlines , and United Airlines Holdings are up more than +1%.

Wynn Resorts Ltd is up more than +7% after a 13D filing showed billionaire Tilman Fertitta reported a 9.9% stake in the company.

Charles Schwab is up more than +3% after reporting core new net assets brought to the company by new and existing clients for October was $24.6 billion.

CNH Industrial NV is up more than +6% after activist investor David Einhorn revealed a new position in the company.

Beazer Homes USA is up more than +15% after reporting Q4 revenue of $806.2 million, stronger than the consensus of $777.8 million.

Earnings Reports (11/14/2024)

Advance Auto Parts Inc (AAP), Applied Materials Inc (AMAT), Globant SA (GLOB), Post Holdings Inc (POST), Walt Disney Co/The (DIS).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

Archer Aviation Inc. ACHR recently announced its third-quarter 2024 results, highlighting some noteworthy progress in introducing its Midnight electric vertical take-off and landing (eVTOL) aircraft in the commercial market. Impressively, the company established a consortium in the United Arab Emirates (UAE) during the third quarter, which paved its way toward launching its commercial air taxi services in the nation during the fourth quarter of 2025.

Moreover, in September, ACHR revealed that it has signed an agreement with Japan Airlines and Sumitomo Corporation’s joint venture, Soracle, which includes a planned purchase of up to $500 million worth of its Midnight aircraft. This agreement brought Archer Aviation’s indicative order book to more than $6 billion, indicating solid revenue generation prospects for the company in the future.

This might lure investors interested in eVTOL manufacturers to add ACHR stock to their portfolio. However, before making any hasty decision, it would be prudent to take a look at how ACHR has performed so far in terms of share price return, the stock’s long-term prospects as well as risks (if any) to investing in the same. This would help investors make a more insightful decision.

ACHR Stock Underperforms Its Industry, Sector & S&P500

Archer Aviation’s shares plunged a dismal 30.3% in the year-to-date period, underperforming the Zacks Aerospace-Defense industry’s loss of 4.1% as well as the broader Zacks Aerospace sector’s gain of 4.4%. It also came short of the S&P 500’s return of 26% in the same time frame.

On the contrary, stellar performance can be seen in the share price return of other industry players like Embraer ERJ, RTX Corp. RTX and L3Harris Technologies LHX, which have witnessed surges of 112.4%, 47.1% and 24.2%, respectively, in the year-to-date period.

ACHR YTD Performance

What Led to ACHR Stock’s Downfall?

To date, Archer Aviation has not been able to generate any revenue as it continues to design, develop and seek the governmental approvals necessary for its Midnight eVTOL aircraft to enter into service. It has also been incurring significantly increasing operating expenses as it progresses toward the certification, manufacturing and successful delivery of its eVTOL jets. Evidently, ACHR’s adjusted operating expenses increased 44.7% year over year in the third quarter.

ACHR has been incurring significant operating losses due to such high operating expenses. This might have been a primary reason behind investors losing confidence in this stock lately.

The company’s cash flows from operating activities have also been reflecting dismal performance in the past couple of quarters as ACHR continues to make cash investments to support the growth of its research and development activities related to its eVTOL aircraft and the general and administrative functions necessary to support such activities. At the end of the third quarter, ACHR’s cash outflow from operating activities amounted to $264.2 million compared with $187.6 million a year ago.

Will ACHR Stock Recover Anytime Soon?

Once Archer Aviation starts delivering its eVTOL aircraft to its customers, we may expect the company to make notable revenue generation. Following the Federal Aviation Administration’s (FAA) finalized Midnight jet’s airworthiness criteria in May 2024, Archer is now nearing completion of Phase 3 of the FAA’s 4-phase type certification process while continuing to rapidly advance through Phase 4, the final phase to secure type certification.

A quick sneak peek at ACHR’s near-term earnings estimates reflects the same.

ACHR’s Upbeat Estimates

The Zacks Consensus Estimates for fourth-quarter and full-year 2024 earnings indicate a year-over-year improvement. The estimate for 2025 also mirrors a similar improvement.

The estimates for fourth-quarter 2024 and full-year 2025 reflect upward revision, which indicate enhanced investor confidence in this stock.

ACHR’s Low Debt-to-Capital

Archer Aviation’s current total debt-to-capital ratio is 8.92X, which is quite lower than its industry’s 55.28X. This indicates that the company is financially less leveraged than its industry.

Risks to Consider Before Choosing ACHR Stock

Despite offering some solid near-term prospects, it’s uncertain whether ACHR can sustain growth in the long run. The market for eVTOL aircraft is still in a nascent stage. Hence, ACHR’s success in this market doesn’t just depend upon its ability to effectively design, develop and certify eVTOL aircraft, but also on how the demand for eVOTL evolves with time.

If the majority of the public does not recognize unmanned aircraft as an alternative to existing methods of public transport, as a result of concerns regarding safety, noise and affordability, the growth potential for ACHR will remain limited over the long run.

Moreover, aerospace manufacturers like ACHR are currently facing several industry challenges like supply-chain issues, rising jet fuel prices and a shortage of skilled labor. One should consider the fact that ACHR might face a delay in completing its aforementioned work. Any significant delay in obtaining FAA certification will likely require the company to raise additional capital above its existing cash on hand. This, in turn, might also delay its generation of revenues.

What Should Be Your Stance?

To summarize, investors interested in Archer Aviation can buy this stock now, considering the upward revision in its earnings estimates, strong progress toward commercial launch of its Midnight eVTOL as well as low leverage. It has been historically observed that low-leverage stocks are less likely to disappoint their investors in times of crisis.

The company’s Zacks Rank #2 (Buy) also supports our investment thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research