Let’s dig into the relative performance of AAR (NYSE: AIR) and its peers as we unravel the now-completed Q3 aerospace earnings season.
Aerospace companies often possess technical expertise and have made significant capital investments to produce complex products. It is an industry where innovation is important, and lately, emissions and automation are in focus, so companies that boast advances in these areas can take market share. On the other hand, demand for aerospace products can ebb and flow with economic cycles and geopolitical tensions, which can be particularly painful for companies with high fixed costs.
The 13 aerospace stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2% above.
Thankfully, share prices of the companies have been resilient as they are up 9.5% on average since the latest earnings results.
AAR (NYSE: AIR)
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE: AIR) is a provider of aircraft maintenance services
AAR reported revenues of $661.7 million, up 20.4% year on year. This print exceeded analysts’ expectations by 2.3%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ Integrated Solutions revenue estimates but a miss of analysts’ adjusted operating income estimates.
"During the quarter, we continued to execute well across the company. We drove 26% organic growth in our new parts distribution activities, had strong operational performance in our hangars and saw a return to growth in our government business. The quarter also included meaningful contributions from Trax, and the recent Product Support acquisition continues to exceed our expectations," said John M. Holmes, Chairman, President and Chief Executive Officer of AAR CORP.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $69.02.
Is now the time to buy AAR? Access our full analysis of the earnings results here, it’s free.
Best Q3: Ducommun (NYSE: DCO)
California’s oldest company, Ducommun (NYSE: DCO) is a provider of engineering and manufacturing services for high-performance products primarily within the aerospace and defense industries.
Ducommun reported revenues of $201.4 million, up 2.6% year on year, outperforming analysts’ expectations by 3.8%. The business had an incredible quarter with an impressive beat of analysts’ EPS and EBITDA estimates.
The market seems content with the results as the stock is up 1% since reporting. It currently trades at $66.03.
Is now the time to buy Ducommun? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Textron (NYSE: TXT)
Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.
Textron reported revenues of $3.43 billion, up 2.5% year on year, falling short of analysts’ expectations by 2.7%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations.
As expected, the stock is down 2.6% since the results and currently trades at $84.61.
Read our full analysis of Textron’s results here.
Redwire (NYSE: RDW)
Based in Jacksonville, Florida, Redwire (NYSE: RDW) is a provider of systems and components used in space infrastructure.
Redwire reported revenues of $68.64 million, up 9.6% year on year. This number missed analysts’ expectations by 2.8%. It was a softer quarter as it also recorded a significant miss of analysts’ EBITDA and EPS estimates.
The stock is up 67.8% since reporting and currently trades at $14.43.
Read our full, actionable report on Redwire here, it’s free.
Rocket Lab (NASDAQ: RKLB)
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.
Rocket Lab reported revenues of $104.8 million, up 54.9% year on year. This result surpassed analysts’ expectations by 2.4%. It was a stunning quarter as it also recorded EBITDA guidance for next quarter exceeding analysts’ expectations.
Rocket Lab delivered the fastest revenue growth among its peers. The stock is up 77.3% since reporting and currently trades at $25.99.
Read our full, actionable report on Rocket Lab here, it’s free.
Market Update
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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