BA vs. GD: Who's the Clear Leader in the Defense Modernization Boom?

Geopolitical instability across the globe has been a major catalyst for the growth of defense giants such as Boeing BA and General Dynamics GD. The United States and its allies have significantly increased their defense budgets in response to rising tensions, particularly the recent confrontations in regions like Europe and the Middle East. 

This surge in funding is not merely about increasing military capacity; it reflects a strategic shift toward modernization and technological superiority. As a result, governments are allocating larger portions of their budgets to programs that upgrade outdated systems, invest in advanced weapon platforms, accelerate next-generation aircraft development, and strengthen overall military readiness. These priorities are creating a favorable environment for leading defense companies whose capabilities align directly with these long-term security objectives.

Both companies share a key commonality as major U.S. defense contractors that develop and supply advanced technologies for national security.

The Standpoint of BA

Boeing’s Defense, Space & Security (“BDS”) segment has a strong outlook supported by rising U.S. defense and space spending, including the Trump administration’s proposed 13.4% defense budget increase (to $1.01 trillion) for fiscal 2026 and major allocations for fighter jet programs and the Space Force. In particular, this proposal offers funding worth $3.1 billion for continued F-15EX Eagle II fighter jet production and $3.5 billion for the Air Force's planned F-47 Next Generation Air Dominance fighter jet platform. The proposal also allocates $40 billion in funding to the Space Force. 
Such solid funding provisions should bode well for the BDS unit.

The company benefits from a diverse defense portfolio and steady contract wins, securing $9 billion in awards in the third quarter of 2025 and building a $76 billion backlog. With 25% year-over-year revenue growth in the quarter and continued investments in new mission-critical technologies, such as the delivery of its 100th KC-46 tanker, Boeing’s BDS unit is positioned for sustained momentum.

The Standpoint of GD

General Dynamics enjoys significant overseas opportunities, with potential orders from Poland, the Czech Republic, the United Kingdom, Romania, Denmark, Germany, Spain, Austria, Canada and Switzerland. In October 2025, its European subsidiary, General Dynamics European Land Systems, received a contract from the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw) to deliver the next-generation reconnaissance vehicle, “LUCHS 2,” for the German Army Reconnaissance Corps. This contract highlights General Dynamics’ growing presence in the European defense market.

At the end of the third quarter of 2025, General Dynamics witnessed a solid backlog of $109.9 billion, driven by a strong order inflow. The increased defense budget also advocates for expanding U.S. shipbuilding capacity by investing in 19 new Navy battle force ships while maintaining 287 ships across key platforms. This should bode well for General Dynamics with its strong presence in the defense shipbuilding industry.

Let's compare the two stocks' fundamentals to determine which one is a better investment option at present.

How Do Zacks Estimates Compare for BA & GD?

The Zacks Consensus Estimate for Boeing’s 2025 and 2026 earnings per share (EPS) has decreased 353.81% and 55.91%, respectively, in the past 60 days.
 

The Zacks Consensus Estimate for General Dynamics’ 2025 and 2026 EPS has increased 1.05% and 0.88%, respectively, in the past 60 days.

Financial Stability of BA & GD  

Boeing’s cash and cash equivalents (along with short-term and other investments) at the end of the third quarter of 2025 totaled $22.98 billion. Its long-term debt was $44.61 billion, which came in quite higher than the cash balance. On the other hand, the company’s current debt, as of Sept. 30, 2025, was $8.74 billion, which came in quite lower than the cash balance. Thus, we may safely conclude that the jet giant holds a strong solvency position, at least in the near term.

General Dynamics’ long-term debt totaled $7.01 billion as of Sept. 30, 2025. The company's cash and cash equivalents amounted to $2.52 billion as of Sept. 29, 2025, lower than its long-term debt. Its short-term debt of $1.01 billion was, however, lower than its cash balance. So, we may safely conclude that General Dynamics holds a strong solvency position in the near term.

Valuation for BA & GD

BA shares trade at a forward 12-month Price/Sales (P/S F12M) multiple of 1.44 compared with GD’s P/S F12M of 1.7.

Debt Position of BA & GD

Currently, Boeing’s total debt to capital is 118.3% compared with General Dynamics’ 24.7%.

BA & GD’s Price Performance

In the past six months, shares of Boeing have declined 9.8%, while those of General Dynamics have risen 24.1%.

BA or GD: Which Is a Better Choice Now?

Boeing and General Dynamics are benefiting from creating and providing cutting-edge technologies for national security. Both companies supply the U.S. military with high-value aerospace, defense, and mission-critical technology, from Boeing's military aircraft and space systems to General Dynamics' submarines, combat vehicles and secure communications. Their similar strategic roles within the military ecosystem make them perfect candidates for a growth-potential comparison.

However, our choice at the moment is General Dynamics, given its better price performance, strong earnings growth and better debt management than Boeing. Given Boeing’s high debt levels and negative earnings growth in the past 60 days, it is advisable to avoid Boeing at present. BA has a Zacks Rank #4 (Sell) and GD carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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