Rising global defense budgets and ongoing geopolitical tensions drive growth in the military aerospace sector as governments focus on bolstering military capabilities and increasing demand for advanced aircraft and defense technologies.
With rising demand for advanced aerospace solutions and defense technologies, top aerospace stocks Textron Inc. (TXT), Lockheed Martin Corporation (LMT), and Northrop Grumman (NOC) are well-positioned to benefit from increased defense contracts and technological advancements. These companies also pay stable dividends.
Driven by rising conflicts and country spending on defense, the aerospace and defense industry is experiencing strong growth, with the market projected to reach $616.32 billion in 2024.
Further, the aerospace market is driven by commercial aviation growth and heightened global defense needs. Meanwhile, increasing defense budgets and complex geopolitical tensions stimulate investment in military aviation and technology, bolstering the aerospace industry's long-term sustainability and economic health.
The global aerospace market is expected to reach $373.61 billion in 2024 and is anticipated to reach around $791.78 billion by 2034, expanding at a CAGR of 7.8%.
Considering these conducive trends, let’s examine the Air/Defence Services stocks in detail.
Stock #3: Textron Inc. (TXT)
Textron Inc. operates globally through its Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation, and Finance segments. Its end users include military and defense organizations, aviation operators, automobile OEMs, government agencies, municipalities, golf courses, resorts, commercial and industrial users, and consumers.
On October 21, 2024, TXT announced Ryan Samples as the launch customer for its Cessna Citation CJ4 Gen3 business jet. This new model reflects Textron Aviation’s commitment to excellence, with Samples expressing excitement about enhancing their travel capabilities with the upgraded aircraft.
It pays an annual dividend of $0.08, which translates to a dividend yield of 0.1% at the prevailing price levels.
TXT’s total revenue increased 2.5% year-over-year to $3.43 billion in the fiscal 2024 third quarter that ended on September 28, 2024. Its net income came in at $223 million, while its adjusted income from continuing operations came at $1.40 per share.
Street expects TXT’s revenue for the fiscal first quarter (ending March 31, 2024) to rise 6.4% year over year to $3.78 billion. Its EPS for the same quarter is expected to be $1.38, up 15.1% from the previous year quarter.
Shares of TXT have gained 14.1% over the past year and 9.3% year-to-date to close the last trading session at $87.87.
TXT’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Value and Momentum. Within this industry, it is ranked #10 out of 71 stocks in the Air/Defence Services industry.
Click here to see TXT’s ratings for Growth, Stability, Quality, and Sentiment.
Stock #2: Lockheed Martin Corporation (LMT)
LMT operates globally through its Aeronautics, Missiles & Fire Control, Rotary & Mission Systems, and Space segments. Its end users include the U.S. government, international military clients, and intelligence agencies, focusing on defense, aviation, and national security.
On November 7, LMT entered into a collaboration with the U.S. Navy and General Atomics and successfully completed the first live-control flight of an uncrewed system using the Unmanned Carrier Aviation Mission Control Station (UMCS), marking a major advancement in autonomous naval aviation.
On October 30, LMT completed its acquisition of Terran Orbital, a modular spacecraft manufacturer, including subsidiary Tyvak International. This acquisition strengthens Lockheed’s capabilities in aerospace and defense, with President Robert Lightfoot highlighting the value of Terran’s innovation and shared commitment to mission success.
It pays an annual dividend of $13.20, which translates to a dividend yield of 2.4% at the prevailing price levels.
During the fiscal third quarter that ended September 29, 2024, LMT’s net sales increased 1.3% year-over-year to $17.10 billion. Its operating income grew 4.8% from the year-ago value to $2.14 billion. In addition, the company’s net earnings came in at $1.62 billion, and EPS amounted to $6.80, up 1% over the prior-year quarter.
Analysts expect LMT’s EPS and revenue for the fiscal year ending December 2025 to rise 4.4% and 4% year to $27.855 and $74.10 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 22.6% to close the last trading session at $551.84. It soared 21.8% year-to-date.
LMT’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
LMT has a B grade in Value, Momentum, Stability, and Quality. It is ranked #4 in the same industry
Beyond what we have stated above, we also have given LMT grades for Growth. Get all the LMT’s ratings here.
Stock #1: Northrop Grumman Corporation (NOC)
NOC operates globally through its Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems segments. The end users primarily include the U.S. government, particularly the Department of Defense, along with international defense organizations.
On September 18, NOC’s B-21 Raider program is advancing with a strong flight test campaign and production scaling, in collaboration with the U.S. Air Force. Through this successful flight testing and validation, NOC’s product reliability and cost-efficiency will increase due to reduced development time and expenses.
It pays an annual dividend of $8.24, which translates to a dividend yield of 1.6% at the prevailing price levels.
In the fiscal third quarter ended September 30, 2024, NOC’s total sales increased 2.3% year-over-year to $10 billion. Its total operating income was $1.12 billion, up 10.2% from the year-ago value. Moreover, its net earnings and EPS stood at $1.03 billion and $7, respectively, representing increases of 9.5% and 13.3% over the prior-year quarter.
Street expects NOC’s revenue and EPS for the quarter ending December 31, 2024, to increase 3.1% and 1.4% year-over-year to $10.96 billion and $6.36, respectively. It surpassed the consensus EPS estimates in all the trailing four quarters.
The stock climbed 11.2% year-to-date and 11.3% over the past year to close the last trading session at $520.58.
NOC’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has a B for Momentum, Stability, and Sentiment. It is ranked #3 in the same industry.
To access NOC’s Growth, Value, and Quality ratings, click here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
LMT shares were unchanged in premarket trading Friday. Year-to-date, LMT has gained 24.16%, versus a 26.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Aerospace Stocks Set to Soar with Defense Spending StockNews.com
