The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how RTX (NYSE:RTX) and the rest of the defense contractors stocks fared in Q4.
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 14 defense contractors stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 4% above.
While some defense contractors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.9% since the latest earnings results.
RTX (NYSE:RTX)
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 $21.62 billion, up 8.5% year on year. This print exceeded analysts’ expectations by 5.8%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ organic revenue and EBITDA estimates.
"RTX delivered a very strong year of performance in 2024 with 11 percent organic sales growth* and 13 percent adjusted EPS growth*, including segment margin expansion* in all three businesses," said RTX President and CEO Chris Calio.
The stock is up 3% since reporting and currently trades at $128.87.
Is now the time to buy RTX? Access our full analysis of the earnings results here, it’s free.
Best Q4: 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 $223.1 million, up 13% year on year, outperforming analysts’ expectations by 23.9%. The business had an incredible quarter with an impressive beat of analysts’ organic revenue estimates and a solid 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 9.3% since reporting. It currently trades at $46.01.
Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: AeroVironment (NASDAQ:AVAV)
Focused on the future of autonomous military combat, AeroVironment (NASDAQ:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
AeroVironment reported revenues of $167.6 million, down 10.2% year on year, falling short of analysts’ expectations by 10.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
AeroVironment delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 11.4% since the results and currently trades at $125.96.
Read our full analysis of AeroVironment’s results here.
CACI (NYSE:CACI)
Founded to commercialize SIMSCRIPT, CACI International (NYSE:CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.
CACI reported revenues of $2.1 billion, up 14.5% year on year. This print surpassed analysts’ expectations by 3.4%. It was an exceptional quarter as it also produced a solid beat of analysts’ backlog and EBITDA estimates.
The stock is down 20.6% since reporting and currently trades at $369.25.
Read our full, actionable report on CACI here, it’s free.
Kratos (NASDAQ:KTOS)
Established with a commitment to supporting national security, Kratos (NASDAQ:KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Kratos reported revenues of $283.1 million, up 3.4% year on year. This number missed analysts’ expectations by 1.7%. It was a slower quarter as it also produced full-year EBITDA guidance missing analysts’ expectations.
The stock is up 19.1% since reporting and currently trades at $29.94.
Read our full, actionable report on Kratos here, it’s free.
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