Defense Contractors Stocks Q3 In Review: Parsons (NYSE:PSN) Vs Peers

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Parsons (NYSE:PSN) and the best and worst performers in the defense contractors industry.

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 strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was in line.

Thankfully, share prices of the companies have been resilient as they are up 7.4% on average since the latest earnings results.

Parsons (NYSE:PSN)

Delivering aerospace technology during the Cold War-era, Parsons (NYSE:PSN) offers engineering, construction, and cybersecurity solutions for the infrastructure and defense sectors.

Parsons reported revenues of $1.62 billion, down 10.4% year on year. This print fell short of analysts’ expectations by 2.3%. Overall, it was a slower quarter for the company with a significant miss of analysts’ revenue estimates and a miss of analysts’ backlog estimates.

“We are pleased with our third quarter results. We delivered double-digit revenue growth, achieved 60 basis points of margin expansion, exceeded our cash flow expectation, secured defense contracts in the Administration's priority areas, and continued to deliver outstanding results in our Critical Infrastructure segment. In addition, our win rates and hiring and retention remain strong, and we completed another accretive acquisition after the quarter ended,” said Carey Smith, chair, president and chief executive officer.

Parsons achieved the highest full-year guidance raise but had the slowest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 16.6% since reporting and currently trades at $68.32.

Is now the time to buy Parsons? Access our full analysis of the earnings results here, it’s free.

Best Q3: 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 $22.48 billion, up 11.9% year on year, outperforming analysts’ expectations by 5.4%. The business had a stunning quarter with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 16.6% since reporting. It currently trades at $187.79.

Is now the time to buy RTX? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: 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 $472.5 million, up 151% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a slower quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

Interestingly, the stock is up 22.1% since the results and currently trades at $344.23.

Read our full analysis of AeroVironment’s results here.

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 $3.19 billion, up 16.1% year on year. This result beat analysts’ expectations by 8.1%. It was a strong quarter as it also recorded an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ EBITDA estimates.

The stock is up 26.5% since reporting and currently trades at $377.64.

Read our full, actionable report on Huntington Ingalls here, it’s free.

Lockheed Martin (NYSE:LMT)

Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE:LMT) specializes in defense, space, homeland security, and information technology products.

Lockheed Martin reported revenues of $18.61 billion, up 8.8% year on year. This number was in line with analysts’ expectations. Overall, it was a strong quarter as it also logged a solid beat of analysts’ backlog estimates and full-year EPS guidance beating analysts’ expectations.

The stock is up 2.8% since reporting and currently trades at $519.89.

Read our full, actionable report on Lockheed Martin here, it’s free.

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