Spotting Winners: AeroVironment (NASDAQ:AVAV) And Defense Contractors Stocks In Q3

Looking back on defense contractors stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including AeroVironment (NASDAQ:AVAV) and its peers.

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.

Luckily, defense contractors stocks have performed well with share prices up 11.5% on average since the latest earnings results.

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. This print exceeded analysts’ expectations by 0.5%. Despite the top-line beat, it was still a slower quarter for the company with a significant miss of analysts’ EBITDA and EPS estimates.

AeroVironment scored the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 29.4% since reporting and currently trades at $365.02.

Read our full report on AeroVironment 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 an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 17.2% since reporting. It currently trades at $188.64.

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

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, falling short of analysts’ expectations by 2.3%. It was a slower quarter as it posted a significant miss of analysts’ revenue estimates and a miss of analysts’ backlog estimates.

Parsons delivered the highest full-year guidance raise but had the slowest revenue growth in the group. As expected, the stock is down 11.8% since the results and currently trades at $70.17.

Read our full analysis of Parsons’s results here.

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 $347.6 million, up 26% year on year. This print topped analysts’ expectations by 8.3%. It was a strong quarter as it also put up a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

The stock is up 39.5% since reporting and currently trades at $114.42.

Read our full, actionable report on Kratos 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 result met analysts’ expectations. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ backlog estimates and full-year EPS guidance beating analysts’ expectations.

The stock is up 7.4% since reporting and currently trades at $543.32.

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

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.