As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the defense contractors industry, including BWX (NYSE: BWXT) 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.

While some defense contractors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.2% since the latest earnings results.

BWX (NYSE: BWXT)

Contributing components and materials to the famous Manhattan Project in the 1940s, BWX (NYSE: BWXT) is a manufacturer and service provider of nuclear components and fuel for government and commercial industries.

BWX reported revenues of $866.3 million, up 28.9% year on year. This print exceeded analysts’ expectations by 9.2%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ revenue estimates.

“We delivered strong financial results in the third quarter of 2025 including double-digit organic revenue growth and healthy free cash flow,” said Rex D. Geveden president and chief executive officer.

BWX scored the fastest revenue growth but had the weakest full-year guidance update of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 16.6% since reporting and currently trades at $180.05.

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

Best Q3: RTX (NYSE: 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 a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 6.4% since reporting. It currently trades at $171.36.

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 (NYSE: PSN)

Delivering aerospace technology during the Cold War-era, Parsons (NYSE: PSN) 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 highest full-year guidance raise but had the slowest revenue growth in the group. As expected, the stock is down 20.7% since the results and currently trades at $63.10.

Read our full analysis of Parsons’s results here.

Kratos (NASDAQ: KTOS)

Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) 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 result beat analysts’ expectations by 8.3%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.

The stock is down 6.1% since reporting and currently trades at $76.99.

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

Northrop Grumman (NYSE: NOC)

Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) 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 number lagged analysts' expectations by 2.7%. Aside from that, it was a mixed quarter as it also logged 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 8.6% since reporting and currently trades at $550.16.

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

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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