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Exclusive Article
These 3 Defense Giants Beat Q1 Estimates—So Why Did Their Stocks Still Fall?By Jessica Mitacek. Article Posted: 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.
- Special Report: Elon Musk already made me a “wealthy man”
As the Iran conflict nears its ninth week, estimates placed its cost at roughly $1 billion to $2 billion per day before the ceasefire announcement. While U.S. taxpayers are footing much of the bill, a select group of companies has seen heightened demand for their implements of war. 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).
For a moment…
Forget about Trump’s ties to Israel.
Forget about reports of Iran’s nuclear program.
Because my research has led me to believe we’re risking World War 3 with Iran for a completely different reason. Click here to find out what it is.
For investors seeking insight into how much upside—if any—remains for those stocks, and how a swift, peaceful end to the conflict could affect their prices, here are some clues. GE Aerospace: Double-Beat Included a 25% Increase in RevenueGE Aerospace provides propulsion solutions for a range of commercial and defense customers. The U.S. military is a major customer, awarding the company several 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 already on GE Aerospace’s books before the Iran war began, they contributed to Q1 revenue. When the company reported on Tuesday, April 21, it said revenue was $11.61 billion, beating analyst estimates and marking a 24.6% year-over-year (YOY) increase. Earnings per share (EPS) came in at $1.86, also above the consensus of $1.81, marking the company’s 14th consecutive beat. In his earnings call comments, CEO Larry Culp said in his opening remarks that the “dynamic geopolitical environment our industry is navigating” contributed to an 87% YOY increase in orders. He added that operating profit rose 18% YOY, EPS increased 25% YOY, free cash flow improved 14% YOY and total engine deliveries were up 43% YOY. Nonetheless, GE shares slid more than 5% on the day as investors reacted to management’s decision not to raise full-year guidance. Valuation concerns also weighed on the stock: the forward price-to-earnings (P/E) ratio is around 37x, which likely contributed to profit-taking after the Q1 results. Northrop Grumman: Top and Bottom Line Beats With B-21 Orders Nearing DeliveryNorthrop Grumman is designing the B-21 Raider—a nuclear-capable, subsonic stealth strategic bomber—as part of 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 airframes in various production stages at Plant 42. While not yet battle-tested, the program already contributed to Northrop Grumman’s Q1 revenue. 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 result marked Northrop Grumman’s 14th earnings 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 noted that demand is rising and highlighted 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 had only managed about a 3% year-to-date (YTD) gain, sold off after the results, with shares sliding nearly 7% after management reaffirmed—rather than raised—full-year guidance. RTX: Punished After a Double BeatRTX, created through the 2020 merger of Raytheon and United Technologies, also impressed on Tuesday, April 21, with Q1 EPS of $1.78, above the consensus estimate of $1.52 and up 21% YOY. Meanwhile, 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, noting 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 sold off on Tuesday, with shares falling more than 4%, which pushed the stock into the red for the year. How Much Upside Can Defense Contractors Still Deliver?Despite the market’s negative reaction on Tuesday, all three contractors remain favored by analysts, each carrying a Moderate Buy rating. Consensus one-year price targets imply upside potential of more than 27% for GE, 22%+ for NOC, and 12%+ for RTX. A near-term resolution to the Iran war could temper investor sentiment. But over the longer term, defense companies should continue to generate revenue from government contracts. That outlook is reflected in projected earnings growth: GE Aerospace’s EPS is forecast to grow more than 16% over the next year, Northrop Grumman’s by nearly 8%, and RTX’s by about 10%. For investors looking to use the post-earnings pullback as an entry point, NOC and RTX currently trade at more attractive forward P/E multiples—around 21 and 28, respectively—compared with GE’s higher multiple. |
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