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This Month's Exclusive Story
These 3 Defense Giants Beat Q1 Estimates—So Why Did Their Stocks Still Fall?Reported by Jessica Mitacek. 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.
- Special Report: Elon’s “Hidden” Company
As the Iran conflict nears its ninth week, estimates placed 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 their implements of war. 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 investors seeking insight into how much potential upside—if any—remains for these stocks, and how a rapid, peaceful end to the conflict could affect their prices, here are some clues. GE Aerospace: Double-Beat Included a 25% Increase in RevenueGE Aerospace provides propulsion solutions for a range of clients, including the U.S. military, and has been awarded 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 on GE Aerospace’s books prior to the start of the Iran war, they contributed to 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 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 said the “dynamic geopolitical environment our industry is navigating” helped drive an 87% year-over-year increase in orders. He 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 investors 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) ratio sits around 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 $4.5 billion production deal with the U.S. Air Force. As of April 2026, two B-21 Raiders are undergoing flight testing at Edwards Air Force Base, with additional airframes in various production stages at Plant 42. While the bombers are not yet battle-tested, they already contributed to the company’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, a 4.4% YOY increase. The earnings beat marked Northrop Grumman’s 14th 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 noted rising demand for the company’s offerings and highlighted 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 has recorded roughly a 3% year-to-date gain, sold off after the Q1 release—shares dropped nearly 7% after management reaffirmed, rather than raised, full-year guidance. RTX: Punished After a Double BeatRTX, formed by the 2020 merger of Raytheon and United Technologies, also impressed on Tuesday, April 21. The company reported Q1 EPS of $1.78, above the consensus of $1.52 and up 21% YOY. Quarterly revenue of $22.08 billion was 8.7% higher YOY and topped analyst expectations of $21.38 billion. Notably, the company has beaten earnings estimates every quarter since Q4 2016. Adjusted sales came in at $22.1 billion, and management raised full-year sales and EPS guidance while maintaining free cash flow guidance. “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, noting 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 contractors remain favored by analysts, each carrying a Moderate Buy rating. Consensus one-year price targets suggest GE has upside potential of more than 27%, NOC more than 22%, and RTX more than 12%. A near-term resolution to the Iran conflict could sour investor sentiment, but over the long term these companies should continue to derive revenue from government contracts. That expectation is reflected in earnings growth forecasts: GE Aerospace’s EPS is projected to grow 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—around 21 and 28, respectively—compared with GE’s roughly 37x. |
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