The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how defense contractors stocks fared in Q3, starting with Mercury Systems (NASDAQ: MRCY).

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

The 14 defense contractors stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was in line.

While some defense contractors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.7% since the latest earnings results.

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 $225.2 million, up 10.2% year on year. This print exceeded analysts’ expectations by 9.5%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ organic revenue and EPS estimates.

“We delivered Q1 results that were ahead of our expectations, with solid year-over-year growth in backlog, revenue, adjusted EBITDA, and free cash flow. Our ability to accelerate deliveries on a number of our customers’ high-priority programs once again contributed to strong results this quarter,” said Bill Ballhaus, Mercury’s Chairman and CEO.

Mercury Systems scored the biggest analyst estimates beat of the whole group. The stock is up 3% since reporting and currently trades at $77.96.

Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: RTX (NYSE: RTX)

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

RTX reported revenues of $22.48 billion, up 11.9% year on year, outperforming analysts’ expectations by 5.4%. The business had a stunning quarter with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 16.4% since reporting. It currently trades at $187.34.

Is now the time to buy RTX? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: AeroVironment (NASDAQ: AVAV)

Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

AeroVironment reported revenues of $472.5 million, up 151% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a slower quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

As expected, the stock is down 8.7% since the results and currently trades at $257.38.

Read our full analysis of AeroVironment’s results here.

Leidos (NYSE: LDOS)

Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.

Leidos reported revenues of $4.47 billion, up 6.7% year on year. This result beat analysts’ expectations by 4.1%. It was an exceptional quarter as it also produced an impressive beat of analysts’ backlog estimates and a solid beat of analysts’ EBITDA estimates.

The stock is down 5% since reporting and currently trades at $183.41.

Read our full, actionable report on Leidos here, it’s free for active Edge members.

General Dynamics (NYSE: GD)

Creator of the famous M1 Abrahms tank, General Dynamics (NYSE: GD) develops aerospace, marine systems, combat systems, and information technology products.

General Dynamics reported revenues of $12.91 billion, up 10.6% year on year. This print surpassed analysts’ expectations by 3.1%. Overall, it was a very strong quarter as it also put up a solid beat of analysts’ backlog estimates and a solid beat of analysts’ revenue estimates.

The stock is flat since reporting and currently trades at $342.60.

Read our full, actionable report on General Dynamics here, it’s free for active Edge members.

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