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Additional Reading from MarketBeat
These 3 Defense Giants Beat Q1 Estimates—So Why Did Their Stocks Still Fall?Written by Jessica Mitacek. Date Posted: 4/22/2026. 
Key Points
- Defense contractors saw strong earnings growth and rising demand tied to the Iran war, but stocks fell as investors focused on guidance and valuations.
- Despite post-earnings selloffs, GE Aerospace, Northrop Grumman, and RTX continue to benefit from long-term government contracts and growing defense spending, supporting steady revenue and earnings outlooks.
- Analysts still see upside in the sector, but a resolution to the conflict could weigh on sentiment, making current pullbacks a potential entry point for long-term investors.
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As the Iran conflict nears its ninth week, estimates put the cost of the fighting at roughly $1 billion to $2 billion per day prior to the ceasefire announcement. While U.S. taxpayers are footing the bill, a select group of companies has seen heightened demand for defense equipment. This week, aerospace and defense contractors began reporting Q1 2026 earnings. With the latest bout of geopolitical unrest in the Middle East having started on Feb. 28, the conflict has affected the top and bottom lines of companies such as GE Aerospace (NYSE: GE), Northrop Grumman (NYSE: NOC), and RTX (NYSE: RTX).
For a moment…
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For investors seeking insight into how much upside—if any—remains for these stocks, and how a swift and peaceful resolution to the conflict could affect prices, here are some clues. GE Aerospace: Double-Beat Included a 25% Increase in RevenueGE Aerospace supplies propulsion systems for a wide range of commercial and defense customers, including the U.S. military, which has awarded the company several multi-billion-dollar contracts. Recent agreements include a $5 billion contract for F110 engines in 2025, a $1.4 billion contract for CH-53K helicopter engines in January 2026, and a $14.16 million, four-year U.S. Air Force contract for fuel control systems that runs through June 2029. While those deals were already on GE Aerospace’s books before the Iran war began, they contributed to the company’s Q1 revenue. When the company reported on Tuesday, April 21, it announced revenue of $11.61 billion, beating analyst estimates and marking a 24.6% year-over-year (YOY) increase. Earnings per share (EPS) came in at $1.86, above the consensus of $1.81, marking the company’s 14th consecutive beat. In his earnings call comments, CEO Larry Culp opened by addressing the conflict in the Middle East, noting that the “dynamic geopolitical environment our industry is navigating” helped drive an 87% YOY increase in orders. Culp added that operating profit rose 18% YOY, EPS increased 25% YOY, free cash grew 14% YOY, and total engine deliveries were up 43% YOY. Nonetheless, GE shares slid more than 5% on the day as the market reacted negatively to management's decision not to raise full-year guidance. Valuation concerns also weighed on the stock; the forward price-to-earnings (P/E) is roughly 37x, which contributed to post-report profit-taking. Northrop Grumman: Top- and Bottom-Line Beats With B-21 Orders Nearing DeliveryNorthrop Grumman is building the B-21 Raider—a nuclear-capable, subsonic stealth strategic bomber—under a multibillion-dollar production agreement with the U.S. Air Force. As of April 2026, two B-21 Raiders are in flight testing at Edwards Air Force Base, with additional aircraft in various production stages at Plant 42. Although not yet battle-tested, the program already contributed to Northrop Grumman’s Q1 revenue. On Tuesday, April 21, the company reported Q1 EPS of $6.14, beating analyst expectations of $6.03. Quarterly revenue of $9.88 billion also surpassed estimates, representing a 4.4% YOY increase. The earnings beat marked Northrop Grumman’s 14th beat in the last 15 quarters. “As we are seeing in recent military operations, many of our systems are playing a critical role in successfully executing the mission,” CEO Kathy Warden said in her earnings call comments. Warden highlighted rising demand for the company’s products, noting that “in the last two years, [Northrop Grumman has] opened over 20 new facilities and added more than 2 million square feet of manufacturing space across the United States.” The stock, which had only mustered about a 3% year-to-date (YTD) gain, sold off after the release of Q1 results, with shares sliding nearly 7% as investors reacted negatively to management reaffirming—rather than raising—full-year guidance. RTX: Shares Fall Despite a Double BeatRTX, formed through the 2020 merger of Raytheon and United Technologies, also impressed on Tuesday, April 21, reporting Q1 EPS of $1.78, above the consensus of $1.52 and up 21% YOY. Quarterly revenue of $22.08 billion was up 8.7% YOY and beat analyst expectations of $21.38 billion. Notably, the company has beaten earnings estimates every quarter since Q4 2016. Adjusted sales were $22.1 billion, and management raised full-year sales and EPS guidance while keeping free cash flow guidance unchanged. “Our backlog is a record $271 billion, up 25% year-over-year, with strong commercial and defense awards in the quarter,” CEO Chris Calio said in his earnings call comments, acknowledging the ongoing situation in Iran. “On the defense side of the business, we saw significant awards across all three segments, highlighting the strength of our product offerings. At Pratt, the military business was awarded over $3 billion for F-135 Lot 19 production.” Still, RTX sold off on Tuesday, with shares falling more than 4%, which pushed the stock into the red for the year. How Much Upside Can Defense Contractors Still Deliver?Despite the market’s negative reactions on Tuesday, all three defense contractors remain broadly favored by analysts, each carrying a Moderate Buy rating. Consensus one-year price targets imply upside potential of more than 27% for GE, more than 22% for NOC, and over 12% for RTX. A near-term resolution to the Iran conflict could temper investor sentiment, but over the long term these companies are likely to sustain revenue streams from government contracts. That view is reflected in earnings growth expectations: GE Aerospace's EPS is forecast to grow by more than 16% over the next year, Northrop Grumman's by nearly 8%, and RTX’s by about 10%. For investors considering the post-earnings selloff as an entry point, NOC and RTX currently trade at more attractive forward P/E multiples—roughly 21 and 28, respectively—than GE. |
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