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Special Report
These 3 Defense Giants Beat Q1 Estimates—So Why Did Their Stocks Still Fall?By Jessica Mitacek. Originally Published: 4/22/2026. 
Key Points
- Defense contractors saw strong earnings growth and rising demand tied to the Iran war, but stocks fell as investors focused on guidance and valuations.
- Despite post-earnings selloffs, GE Aerospace, Northrop Grumman, and RTX continue to benefit from long-term government contracts and growing defense spending, supporting steady revenue and earnings outlooks.
- Analysts still see upside in the sector, but a resolution to the conflict could weigh on sentiment, making current pullbacks a potential entry point for long-term investors.
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As the Iran conflict neared its ninth week, estimates put the cost at roughly $1 billion to $2 billion per day prior to the ceasefire announcement. While U.S. taxpayers are footing the bill, a small group of companies has seen heightened demand for defense equipment and services. This week, aerospace and defense contractors began reporting Q1 2026 earnings. With the latest bout of geopolitical unrest in the Middle East having started on Feb. 28, the conflict has affected the top and bottom lines of companies like GE Aerospace (NYSE: GE), Northrop Grumman (NYSE: NOC), and RTX (NYSE: RTX).
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For investors seeking insight into potential upside—and how a swift, peaceful end to the conflict could affect share prices—here are some takeaways. GE Aerospace: Double-Beat Included a 24.6% Increase in RevenueGE Aerospace provides propulsion and related systems for a range of commercial and defense customers. The U.S. military is a major customer and has awarded the company multiple multi-billion-dollar contracts. Recent agreements include a $5 billion contract for F110 engines in 2025, a $1.4 billion contract for CH-53K helicopter engines in January 2026, and a $14.16 million, four-year U.S. Air Force contract for fuel control systems that runs through June 2029. While those deals were on GE Aerospace’s books before the Iran conflict began, they helped drive Q1 revenue. When the company reported on Tuesday, April 21, it recorded revenue of $11.61 billion, beating analyst estimates and marking a 24.6% year-over-year increase. Earnings per share (EPS) were $1.86, above the consensus of $1.81—GE’s 14th consecutive beat. In his earnings call comments, CEO Larry Culp said the “dynamic geopolitical environment our industry is navigating” helped drive an 87% year-over-year increase in orders. He added that operating profit rose 18% YOY, EPS increased 25% YOY, free cash rose 14% YOY, and total engine deliveries were up 43% YOY. Nonetheless, GE shares slid more than 5% on the day after management declined to raise full-year guidance. Valuation concerns also weighed on the stock—its forward price-to-earnings (P/E) is roughly 37x—which prompted profit-taking following the report. Northrop Grumman: Top- and Bottom-Line Beats With B-21 Orders Nearing DeliveryNorthrop Grumman is building the B-21 Raider—a nuclear-capable, subsonic stealth strategic bomber—under a $4.5 billion production deal with the U.S. Air Force. As of April 2026, two B-21 Raiders are undergoing flight testing at Edwards Air Force Base, with additional aircraft in various stages of production at Plant 42. While the bombers are not yet battle-tested, their production contributed to Q1 revenue for Northrop Grumman. On Tuesday, April 21, the company reported Q1 EPS of $6.14, beating analyst expectations of $6.03. Quarterly revenue of $9.88 billion also surpassed estimates, a 4.4% YOY increase. The results marked Northrop Grumman’s 14th beat in the last 15 quarters. “As we are seeing in recent military operations, many of our systems are playing a critical role in successfully executing the mission,” CEO Kathy Warden said in her earnings call comments. Warden highlighted growing demand and noted that “in the last two years, [Northrop Grumman has] opened over 20 new facilities and added more than 2 million square feet of manufacturing space across the United States.” The stock, which has produced roughly a 3% year-to-date (YTD) gain, sold off after the release, with shares sliding nearly 7% as investors reacted to management reaffirming—rather than raising—full-year guidance. RTX: Punished After a Double BeatRTX, formed by the 2020 merger of Raytheon and United Technologies, also impressed on Tuesday, April 21, when it reported Q1 EPS of $1.78, above the consensus of $1.52 and up 21% YOY. Quarterly revenue of $22.08 billion was 8.7% higher YOY and topped analyst expectations of $21.38 billion. Notably, the company has beaten earnings estimates every quarter since Q4 2016. Adjusted sales were $22.1 billion, and management raised full-year sales and EPS guidance while maintaining free cash flow guidance. “Our backlog is a record $271 billion, up 25% year-over-year, with strong commercial and defense awards in the quarter,” CEO Chris Calio said in his earnings call comments, while acknowledging the ongoing situation in Iran. “On the defense side of the business, we saw significant awards across all three segments, highlighting the strength of our product offerings. At Pratt, the military business was awarded over $3 billion for F-135 Lot 19 production.” Still, RTX shares fell more than 4% on Tuesday, which pushed the stock into the red on the year. How Much Upside Can Defense Contractors Still Deliver?Despite the market’s negative reactions, all three contractors remain broadly favored by analysts and carry a Moderate Buy consensus. One-year price targets imply upside of roughly 27% for GE, 22% for NOC, and 12% for RTX. A near-term resolution to the Iran war could weaken investor sentiment, but over the long term defense companies are expected to sustain revenue from government contracts. That view is reflected in earnings growth expectations: GE Aerospace’s EPS is forecast to grow by more than 16% over the next year, Northrop Grumman’s by nearly 8%, and RTX’s by about 10%. For investors considering the post-earnings selloff as an entry point, NOC and RTX are trading at relatively more attractive forward P/E multiples of around 21 and 28, respectively. |
