Looking back on aerospace and defense stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Axon (NASDAQ:AXON) and its peers.
Emissions and automation are important in aerospace, so companies that boast advances in these areas can take market share. On the defense side, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression toward Taiwan–have highlighted the need for consistent or even elevated defense spending. As for challenges, demand for aerospace and defense products can ebb and flow with economic cycles and national defense budgets, which are unpredictable and particularly painful for companies with high fixed costs.
The 29 aerospace and defense stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 1.3% above.
While some aerospace and defense stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1% since the latest earnings results.
Axon (NASDAQ:AXON)
Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Axon reported revenues of $544.3 million, up 31.7% year on year. This print exceeded analysts’ expectations by 3.6%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates.
"We spend a lot of time thinking about what could go wrong. But we also need to think about what could go right. Can we do better than today?" — Rick Smith, Axon Founder and CEO
Interestingly, the stock is up 28.2% since reporting and currently trades at $601.01.
Best Q3: 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 $204.4 million, up 13% year on year, outperforming analysts’ expectations by 12.5%. The business had an incredible quarter with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EPS estimates.
Mercury Systems pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 14.8% since reporting. It currently trades at $39.32.
Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Huntington Ingalls (NYSE:HII)
Building Nimitz-class aircraft carriers used in active service, Huntington Ingalls (NYSE:HII) develops marine vessels and their mission systems and maintenance services.
Huntington Ingalls reported revenues of $2.75 billion, down 2.4% year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 22.3% since the results and currently trades at $194.90.
Read our full analysis of Huntington Ingalls’s results here.
Leidos (NYSE:LDOS)
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 $4.19 billion, up 6.9% year on year. This number surpassed analysts’ expectations by 3%. Overall, it was a stunning quarter as it also recorded an impressive beat of analysts’ backlog and EPS estimates.
The stock is down 6% since reporting and currently trades at $159.60.
Read our full, actionable report on Leidos here, it’s free.
Boeing (NYSE:BA)
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE:BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Boeing reported revenues of $17.84 billion, down 1.5% year on year. This print missed analysts’ expectations by 0.6%. It was a softer quarter as it also logged a significant miss of analysts’ adjusted operating income estimates.
The stock is down 13.5% since reporting and currently trades at $138.25.
Read our full, actionable report on Boeing here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September, a quarter in November) have kept 2024 stock markets frothy, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there's still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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