Hot or Not, Stock Market Edition: 08/07/2025

Here’s what’s making moves in the market today: 

• Hot: After we featured it yesterday, Leidos Holdings (LDOS) jumped dramatically; BWX Technologies (BWXT) gains nearly 20% on good news 
• Not: Why did Gartner (IT) and UL Solutions (UL) both lose despite good earnings?

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🔥 HOT: U.S. defense contractor BWX Technologies (NYSE: BWXT) gained 17.8% on Tuesday after its quarterly earnings report topped Wall Street’s predictions. The company, which specializes in components for nuclear reactors, reported EPS of $1.02 for the second quarter, nearly 30% higher than the consensus estimate of $0.79 per share. BWX also upped its full-year guidance, saying that it has $6 billion worth of outstanding orders that will carry it into 2026. Our review of BWXT gives it B ratings in Momentum, Safety, and Financials. The company’s Safety rating is due to its low-variance returns over the last six months and the fact that around 16% of its backlog comes from a $1 billion contract with the U.S. Navy. Overall, we give the stock a B Zen Rating and a Buy recommendation.

🥶 NOT: Shares of Gartner (NYSE: IT) fell by 27.6% on Tuesday despite the company reporting solid second-quarter numbers during its shareholders' call. While IT’s second-quarter performance was solid and in line with Wall Street’s expectations, the company lowered its full-year revenue projections and reported decelerating growth compared with the same quarter of last year. Of particular concern is the decline of government contracts, which seems like a sign that the U.S. government is following through on its promise to cut spending on consulting. IT is now down 49.9% YTD, and its path forward is unclear. Our analysis gives IT D ratings in Growth and Momentum and ultimately drives us to give the stock a Zen Rating of C and Hold recommendation. The company’s Financials (A rating) are still strong, but its stock will continue to drop unless it can get ahold of new business.

🔥 HOT: Leidos Holdings (NYSE: LDOS) gained 7.5% after turning in solid second-quarter numbers and issuing strong guidance for the remainder of 2025. The company has its fingers in a lot of pies, but the primary driver of growth year-over-year was its defense systems business. That segment grew 9.7% since last year on the back of increased demand for its air defense and space-based detection systems. Leidos is a versatile business with a lot of internal diversification, which makes it a good stock for defense and defense-adjacent exposure. We’re quite bullish on LDOS due to the A ratings our research gives it in Value and Sentiment. The stock also gets B ratings in Safety and Financials, making it a stable long-term play. Ultimately, we give LDOS an A Zen Rating and a Strong Buy recommendation.

🥶 NOT: UL Solutions (NYSE: UL) lost 11.5% on Tuesday after its second-quarter earnings report showed lower net income despite increased revenue. The company’s revenue increased by just over 6%, but its net income fell by more than 8.5%, triggering a mini selloff that put a dent in an otherwise outstanding year. UL is still up 29.3% YTD even after Tuesday’s loss, but investors are becoming increasingly concerned about the company’s management and future. Our internal analysis of UL is very much a “Tale of Two Stocks” scenario. The stock gets A ratings in Safety and Financials, but a D rating in Growth and a C rating in Value. While it’s clear that the company is on solid ground, its ability to generate new business is much less clear. For now, we give UL a C Zen Rating and a Hold recommendation.

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