Aerospace and Defense Stocks Q3 In Review: Byrna (NASDAQ:BYRN) Vs Peers

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the defense contractors industry, including Kratos 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 13 defense contractors stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.6% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5% since the latest earnings results.

Kratos

Established with a commitment to supporting national security, Kratos 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 exceeded analysts’ expectations by 8.3%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.

Eric DeMarco, Kratos’ President and CEO, said, “Our Q3 financial results are representative of the increasing demand for Kratos’ military grade hardware, systems and software to support U.S. National Security and its allies. Also reflective of this demand, we are once again increasing our full year 2025 revenue guidance, and we are increasing our full year 2026 organic revenue growth forecast up to 15 percent to 20 percent above our expected increased annual 2025 revenue. Additionally, we are providing a preliminary 2027 organic revenue growth target of 18 percent to 23 percent above this increased 2026 estimated revenue range. We are also expecting EBITDA margin expansion for both 2026 and 2027, as we scale the business and transition to more profitable contracts, with EBITDA margins expected to increase even as we continue to make significant bid, proposal and other new opportunity related investments as we have in 2025, as we pursue multiple large new program opportunities.”

Unsurprisingly, the stock is down 15.4% since reporting and currently trades at $69.35.

Is now the time to buy Kratos? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: 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 6.1% since reporting. It currently trades at $170.86.

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

Slowest Q3: Parsons

Delivering aerospace technology during the Cold War-era, Parsons 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 slowest revenue growth in the group. Interestingly, the stock is up 2.7% since the results and currently trades at $81.69.

Read our full analysis of Parsons’s results here.

CACI

Founded to commercialize SIMSCRIPT, CACI International offers defense, intelligence, and IT solutions to support national security and government transformation efforts.

CACI reported revenues of $2.29 billion, up 11.2% year on year. This print topped analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.

The stock is up 15.3% since reporting and currently trades at $599.90.

Read our full, actionable report on CACI here, it’s free for active Edge members.

Northrop Grumman

Responsible for the development of the first stealth bomber, Northrop Grumman specializes in providing aerospace, defense, and security solutions for various industry applications.

Northrop Grumman reported revenues of $10.42 billion, up 4.3% year on year. This result lagged analysts' expectations by 2.7%. Zooming out, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ revenue estimates.

Northrop Grumman had the weakest performance against analyst estimates among its peers. The stock is down 5.4% since reporting and currently trades at $569.26.

Read our full, actionable report on Northrop Grumman here, it’s free for active Edge members.

What Happened?

A number of stocks fell in the afternoon session after markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts. 

While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%.This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment. 

Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Custom Parts Manufacturing company 3D Systems fell 4.5%. Is now the time to buy 3D Systems? Access our full analysis report here, it’s free for active Edge members.
• Aerospace company Redwire fell 6.7%. Is now the time to buy Redwire? Access our full analysis report here, it’s free for active Edge members.
• Construction and Maintenance Services company Construction Partners fell 3.6%. Is now the time to buy Construction Partners? Access our full analysis report here, it’s free for active Edge members.
• Electrical Systems company Methode Electronics fell 3%. Is now the time to buy Methode Electronics? Access our full analysis report here, it’s free for active Edge members.
• Specialty Equipment Distributors company Alta fell 3.3%. Is now the time to buy Alta? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Redwire (RDW)

Redwire’s shares are extremely volatile and have had 96 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 2% on the news that the company announced it was awarded a $44 million contract from the Defense Advanced Research Projects Agency (DARPA). The phase 2 contract provided funding to advance DARPA's Otter Very Low Earth Orbit (VLEO) mission. The funds were allocated to complete the manufacturing and delivery of what was described as the world's first "air-breathing" spacecraft. Redwire utilized its SabreSat platform for the project, which aimed to advance next-generation orbital capabilities. The contract award highlighted the company's role in developing innovative space and defense technology solutions.

Redwire is down 70.3% since the beginning of the year, and at $5.06 per share, it is trading 80.3% below its 52-week high of $25.66 from February 2025. Investors who bought $1,000 worth of Redwire’s shares at the IPO in January 2021 would now be looking at an investment worth $485.69.

What Happened?

A number of stocks fell in the morning session after concerns regarding lofty artificial intelligence valuations triggered a pullback in the technology sector. 

Nvidia slid 3% ahead of its earnings report, dragging down fellow "Magnificent Seven" peers despite a major partnership announcement with Anthropic, as investors increasingly question the durability of the AI rally.Market sentiment was further dampened by Bitcoin dropping below $90,000, signaling reduced risk appetite, and growing anxiety that the Federal Reserve may pause rate cuts in December, with the implied probability of a cut falling to roughly 50%. 

Adding to the weakness, Home Depot shares declined following an earnings miss and a cut to its full-year outlook. This combination of continued de-risking and valuation skepticism put the S&P 500 on pace for its fourth consecutive daily decline.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Electronic Components company Vicor fell 3.2%. Is now the time to buy Vicor? Access our full analysis report here, it’s free for active Edge members.
• Energy Products and Services company FTAI Infrastructure fell 1.8%. Is now the time to buy FTAI Infrastructure? Access our full analysis report here, it’s free for active Edge members.
• Aerospace company Rocket Lab fell 2.6%. Is now the time to buy Rocket Lab? Access our full analysis report here, it’s free for active Edge members.
• Automobile Manufacturing company Lucid fell 4%. Is now the time to buy Lucid? Access our full analysis report here, it’s free for active Edge members.
• Aerospace company Redwire fell 3.6%. Is now the time to buy Redwire? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Lucid (LCID)

Lucid’s shares are extremely volatile and have had 53 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock dropped 7.4% on the news that Stifel lowered its price target on the stock, citing concerns about the company's need for more capital. 

The investment firm cut its price target to $17.00 from $21.00, though it maintained a Hold rating on the electric vehicle maker. This decision followed Lucid's third-quarter financial results, where revenue fell short of expectations. The company also narrowed its 2025 production guidance to 18,000 vehicles. Stifel noted confidence in Lucid's technology but expressed worry about its need to raise more money in the coming years. Adding to the negative sentiment, Lucid had recently announced an offering of $875 million in convertible senior notes, which created fears among investors about the potential for their holdings to be diluted.

Lucid is down 58.8% since the beginning of the year, and at $12.47 per share, it is trading 64.2% below its 52-week high of $34.80 from February 2025. Investors who bought $1,000 worth of Lucid’s shares 5 years ago would now be looking at an investment worth $128.07.