As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the aerospace and defense industry, including Axon (NASDAQ: AXON) and its peers.
Emissions and automation are important in aerospace, so companies that boast advances in these areas can take market share. On the defense side, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression toward Taiwan–have highlighted the need for consistent or even elevated defense spending. As for challenges, demand for aerospace and defense products can ebb and flow with economic cycles and national defense budgets, which are unpredictable and particularly painful for companies with high fixed costs.
The 30 aerospace and defense stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.9% while next quarter’s revenue guidance was 0.7% below.
In light of this news, share prices of the companies have held steady as they are up 1.7% on average since the latest earnings results.
Axon (NASDAQ: AXON)
Providing body cameras and tasers for first responders, AXON (NASDAQ: AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Axon reported revenues of $668.5 million, up 32.8% year on year. This print exceeded analysts’ expectations by 4.3%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ ARR estimates and a beat of analysts’ EPS estimates.
Interestingly, the stock is up 3.4% since reporting and currently trades at $768.
Best Q2: Mercury Systems (NASDAQ: MRCY)
Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.
Mercury Systems reported revenues of $273.1 million, up 9.9% year on year, outperforming analysts’ expectations by 11.9%. The business had an incredible quarter with an impressive beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 28.4% since reporting. It currently trades at $68.98.
Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Lockheed Martin (NYSE: LMT)
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.
Lockheed Martin reported revenues of $18.16 billion, flat year on year, falling short of analysts’ expectations by 2.3%. It was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 1.3% since the results and currently trades at $455.25.
Read our full analysis of Lockheed Martin’s results here.
AerSale (NASDAQ: ASLE)
Providing a one-stop shop that integrates multiple services and product offerings, AerSale (NASDAQ: ASLE) delivers full-service support to mid-life commercial aircraft.
AerSale reported revenues of $107.4 million, up 39.3% year on year. This result beat analysts’ expectations by 24.4%. It was an incredible quarter as it also recorded a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
AerSale delivered the biggest analyst estimates beat among its peers. The stock is up 42.1% since reporting and currently trades at $8.77.
Read our full, actionable report on AerSale here, it’s free.
Cadre (NYSE: CDRE)
Originally known as Safariland, Cadre (NYSE: CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Cadre reported revenues of $157.1 million, up 8.9% year on year. This number surpassed analysts’ expectations by 3.3%. Aside from that, it was a slower quarter as it recorded a significant miss of analysts’ adjusted operating income estimates and full-year EBITDA guidance missing analysts’ expectations.
The stock is down 11.6% since reporting and currently trades at $30.59.
Read our full, actionable report on Cadre 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 U.S. 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, leaving much uncertainty around 2025.
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