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Today’s Exclusive Story
Defense Behemoths: Winners and Loser During Q4 Earnings Cycle
Reported by Leo Miller. Publication Date: 2/2/2026.
At a Glance
- Defense stocks soared in 2025, and many of the industry’s biggest players just reported their year-end results.
- Northrop Grumman and RTX gained positive reactions from their releases, with shares and price targets rising.
- Despite shares falling, analysts are still optimistic on General Dynamics.
A plethora of defense giants just reported their Q4 2025 earnings. The cycle produced some standout performances and a few results that left investors wanting more. Here are the most notable winners and losers from the latest round of defense reports.
Winner: Northrop Grumman Sees Growth Accelerating in 2026
U.S. defense behemoth Northrop Grumman (NYSE: NOC), known for building stealth bombers like the B-2 Spirit, was a clear winner in its latest earnings report. Northrop posted strong Q4 2025 earnings, released before the market’s open on Jan. 27. Revenue came in at $11.7 billion, up almost 10% and beating estimates by more than $100 million. Adjusted earnings per share (EPS) rose about 13% to $7.23, comfortably above estimates of $6.97.
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In a positive sign for its outlook, Northrop expects revenue to grow in the mid-single-digit range in 2026, a notable acceleration from the roughly 2% full-year sales growth it delivered in 2025.
Northrop’s results prompted optimism among investors and Wall Street analysts. Shares rose 2.7% on Jan. 27, and several analysts raised their forecasts materially.
The consensus price target on Northrop sits close to $689, near its Jan. 30 closing price. However, price targets issued after the earnings release average about $762, implying meaningful upside of roughly 10%.
Winner: RTX Gains, Backlog Hits Record High
RTX (NYSE: RTX) also posted a solid quarter. Sales rose 12% to $24.2 billion, topping estimates by $1.6 billion. Adjusted EPS was essentially flat at $1.55, up less than 1%, but still ahead of the $1.47 analysts had expected.
RTX expects sales growth to moderate in 2026 but anticipates free cash flow growth of about 8% at the midpoint of its guidance. A record backlog of $268 billion supports the outlook, providing meaningful revenue visibility over the next several years — roughly three times its 2025 sales.
While RTX is a major defense contractor, it also serves the commercial aviation market. The company expects continued growth in commercial aircraft production in 2026, which should support Collins Aerospace and Pratt & Whitney.
Overall, RTX shares climbed about 3.7% on the day of its Jan. 27 pre-market release.
The current consensus price target near $199 implies roughly 1% downside. Several analysts updated their targets after the report; those revisions average about $223, implying roughly 11% upside.
Loser: General Dynamics Falls on Guidance, But Analysts Still See Solid Upside
Conversely, markets reacted less favorably to General Dynamics (NYSE: GD). Sharesclosed down 2.7% on the day of the company’s Jan. 28 release, which posted during market hours.
General Dynamics operates in areas many other defense firms do not, including making and servicing Gulfstream private jets and building nuclear submarines.
The company’s revenue rose 8% in the quarter to $14.4 billion, beating estimates of about $13.8 billion. EPS increased less than 1% to $4.17, topping expectations of $4.11.
However, the company’s guidance implies roughly 4% revenue growth in 2026, a marked slowdown from the 10% growth it delivered in 2025.
It also sees EPS growth moderating to about 4% from 13% last year. On the plus side, it finished the year with a record backlog of $118 billion — more than double its 2025 revenue.
General Dynamics guided Aerospace operating margins near 14% in 2026, short of its longer-term “high teens” target. The softer guidance was the primary driver of the market’s negative reaction.
The consensus price target on General Dynamics sits near $372, implying about 6% upside. Despite the stock’s decline, analysts increased their targets after the results; those updated targets average roughly $403, suggesting potential upside near 15%.
Defense Industry Eyes Catalyst in Potential Gov’t Spending Boost
Looking ahead, the defense industry could receive a significant tailwind if the U.S. government increases defense spending. President Trump has proposed boosting defense spending to $1.5 trillion in the government’s next fiscal year, which would represent a roughly 66% increase over the prior budget. That proposal would still require congressional approval and is far from guaranteed.
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