Defense Behemoths: Winners and Loser During Q4 Earnings Cycle

A plethora of defense giants just reported their Q4 2025 earnings. The cycle saw some standout performances, as well as others that left investors wanting more. Here are the most notable winners and losers from the latest round of defense earnings.

Winner: Northrop Grumman Sees Growth Accelerating in 2026

U.S. defense behemoth Northrop Grumman (NYSE: NOC) was a clear winner in its latest earnings report. Northrop is particularly known for building stealth bombers, like its B-2 Spirit craft. The company posted strong Q4 2025 earnings, released before the market’s open on Jan. 27. Revenue came in at $11.7 billion, growing by almost 10%, and beating estimates by more than $100 million. The company’s adjusted earnings per share (EPS) rose around 13% to $7.23, solidly surpassing estimates of $6.97.

In a positive sign for its outlook, Northrup expects revenue to grow in the mid-single-digit range in 2026. This would be a notable acceleration over 2025, as sales grew by only around 2% for the full year.

Northrup’s results led to optimism among investors and Wall Street analysts alike. Shares rose by 2.7% on Jan. 27, and several analysts significantly lifted their forecasts.

The consensus price target on Northrup sits close to $689, near its Jan. 30 closing price. However, price targets released after earnings average around $762, implying meaningful upside of approximately 10%.

Winner: RTX Gains, Backlog Hits Record High

RTX (NYSE: RTX) also did well for itself in Q4 2025. Sales grew by 12% to $24.2 billion, significantly exceeding estimates by $1.6 billion. The company’s adjusted EPS was essentially flat at $1.55, growing by less than 1%. Still, this was better than the $1.47, or 5% decline, that analysts had anticipated.

Despite expecting sales growth to moderate in 2026, RTX anticipates solid free cash flow growth of around 8% based on its midpoint guidance. RTX’s record backlog of $268 billion also supports its outlook, providing solid revenue visibility over the next few years. This figure is about three times its 2025 sales.

While RTX is a large defense contractor, it also plays in the commercial airline space. It sees commercial airline production continuing to grow in 2026, supporting both its Collins Aerospace and Pratt & Whitney businesses.

Overall, RTX saw a strong 3.7% up-move on the day of its Jan. 27 pre-market release.

The current consensus price target on RTX near $199 implies around 1% downside. However, several analysts issued price target updates following the earnings report. Those updated targets average to about $223, implying 11% upside in shares.

Loser: General Dynamics Falls on Guidance, But Analysts Still See Solid Upside

On the other side of the coin, markets were not particularly impressed by General Dynamics’ (NYSE: GD) Q4 2025 earnings. Shares closed down by 2.7% on the day of the company’s Jan. 28 release, which posted during market hours. 

General Dynamics has its hand in baskets that many other aerospace and defense companies do not. This includes making and servicing its high-end Gulfstream private jets, as well as building nuclear submarines.

The company’s revenue grew by 8% in the quarter to $14.4 billion. This beat estimates of approximately $13.8 billion. EPS rose less than 1% to $4.17, but beat expectations of $4.11, which had implied an approximately 1% decline.

The company’s guidance implies around 4% growth in 2026, a significant deceleration from the 10% growth it saw in 2025.

It also sees EPS growth moderating to about 4% from 13% last year. However, the company also exited the year with a record backlog of $118 billion, more than double the revenue it generated in 2025.

The company guided Aerospace operating margins near 14% in 2026, which clashes with its longer-term “high teens” goal. Overall, the company’s somewhat disappointing guidance was the main driver of the market’s reaction.

The consensus price target on General Dynamics sits near $372, implying 6% upside in shares. Despite the stock's decline, analysts issued strong price targets following the company’s results. These update targets average around $403, suggesting that shares could rise by 15%.

Defense Industry Eyes Catalyst in Potential Gov’t Spending Boost

Looking forward, the defense industry as a whole could gain a significant tailwind through the U.S. government’s increased defense budget. President Trump is looking to boost defense spending to $1.5 trillion in the government’s next fiscal year, which would mark a 66% increase over the prior budget. Still, this is far from guaranteed, as it requires approval from Congress.

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