The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how defense contractors stocks fared in Q1, starting with BWX (NYSE: BWXT).

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 Q1. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady as they are up 2.8% on average 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 $682.3 million, up 13% year on year. This print exceeded analysts’ expectations by 5.1%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates.

“We had a solid start to 2025 with financial results that were ahead of expectations, driven by an increased pace of work and good operational performance," said Rex D. Geveden, president and chief executive officer.

BWX delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 1.8% since reporting and currently trades at $109.99.

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

Best Q1: Leidos (NYSE: LDOS)

Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.

Leidos reported revenues of $4.25 billion, up 6.8% year on year, outperforming analysts’ expectations by 3.6%. The business had a very strong quarter with a solid beat of analysts’ backlog and EBITDA estimates.

The market seems happy with the results as the stock is up 7.9% since reporting. It currently trades at $159.50.

Is now the time to buy Leidos? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: 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 $9.47 billion, down 6.6% year on year, falling short of analysts’ expectations by 4.7%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations.

Northrop Grumman delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 11.3% since the results and currently trades at $471.12.

Read our full analysis of Northrop Grumman’s results here.

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 $1.55 billion, up 1.2% year on year. This number missed analysts’ expectations by 3.1%. Aside from that, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates but a slight miss of analysts’ backlog estimates.

Parsons pulled off the highest full-year guidance raise among its peers. The stock is flat since reporting and currently trades at $69.

Read our full, actionable report on Parsons here, it’s free.

KBR (NYSE: KBR)

Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.

KBR reported revenues of $2.06 billion, up 13% year on year. This print lagged analysts' expectations by 1.4%. Aside from that, it was a strong quarter as it produced a solid beat of analysts’ EBITDA estimates.

The stock is up 7.5% since reporting and currently trades at $55.45.

Read our full, actionable report on KBR here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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