The Zacks Aerospace sector’s second-quarter 2026 earnings are expected to outperform estimates, driven by rising defense spending, increasing geopolitical tensions, and continued military modernization focused on missile defense, autonomous systems, artificial intelligence, space, and cybersecurity. These trends, along with growing international defense demand and efforts to strengthen the defense industrial base, reinforce long-term growth prospects for major defense contractors. Per the latest Earnings Preview, the sector’s quarterly earnings are expected to rise 21.1% on 11.8% higher revenues.
With the assistance of the Zacks Stock Screener, we have identified four defense stocks, namely General Dynamics GD, Curtiss-Wright CW, Huntington Ingalls Industries HII and L3Harris Technologies LHX, which are poised to beat on earnings this reporting cycle.
These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) — to surpass expectations. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Factors That are Likely to Influence Defense Stocks’ Q2 Results
In the second quarter of 2026, the U.S. defense sector is expected to have benefited from the government's commitment to higher military spending and accelerating military modernization amid rising geopolitical tensions. Increased investment in missile defense, advanced aircraft, autonomous systems, AI, cyber capabilities, and naval expansion, together with growing global defense budgets, strengthened long-term demand and export opportunities for major U.S. defense contractors.
Another key indicator supporting the U.S. defense sector is the industry's record order backlog. Major defense contractors continue to build substantial backlogs as governments place multi-year orders for aircraft, missile systems, naval platforms, satellites, and defense technologies. A large backlog provides strong revenue visibility, as these long-duration contracts are typically executed over several years, supporting stable cash flows and earnings. It also reflects sustained global demand driven by rising defense budgets, military modernization programs, and increased international orders, positioning the sector for continued growth even as individual contract awards fluctuate sequentially.
Defense companies with exposure to commercial aerospace are likely to have benefited from the steady recovery in global air travel, supporting demand for aircraft, engines, and related components alongside their core defense businesses.
However, these positives are likely to have been partially offset by persistent challenges, including skilled labor shortages and supply-chain disruptions. U.S. tariffs on key trading partners are expected to have increased costs and delayed production and deliveries, tempering overall second-quarter performance of some defense companies.
Potential Defense Outperformers
General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. Marine Systems likely remained a key growth driver, supported by improving shipyard productivity, stronger execution on Columbia- and Virginia-class submarine programs, and ongoing capacity expansion to meet rising U.S. naval demand. Meanwhile, Gulfstream is expected to report another solid quarter, benefiting from sustained manufacturing improvements and strong deliveries across the G700 and G800 aircraft programs.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $3.95 per share, indicating an improvement of 5.6% from the year-ago quarter’s reported figure. GD currently has an Earnings ESP of +1.61% and a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.
General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation price-eps-surprise | General Dynamics Corporation Quote
Curtiss-Wright provides highly engineered products and services for high-performance platforms, and critical applications in key areas such as commercial aerospace and defense electronics, reactor coolant pumps for next-generation nuclear reactors as well as advanced surface treatment technologies. The company’s quarterly performance is expected to have gained from increased U.S. and allied defense spending, particularly in naval defense and ground defense programs. The company also expects continued momentum from robust order activity, providing strong revenue visibility.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $3.62 per share, indicating an increase of 12.1% from the year-ago reported figure. CW currently has an Earnings ESP of +0.36% and a Zacks Rank of 3.
Curtiss-Wright Corporation Price and EPS Surprise
Curtiss-Wright Corporation price-eps-surprise | Curtiss-Wright Corporation Quote
Huntington Ingalls Industries designs, builds, and maintains nuclear-powered ships, including aircraft carriers and submarines, as well as non-nuclear vessels such as surface combatants, expeditionary warfare/amphibious assault and coastal defense surface ships for the U.S. Navy and Coast Guard. The company also provides after-market services for military ships worldwide. Higher activity across several key defense programs likely drove broad-based growth during the second quarter. Strong shipbuilding demand supported Ingalls, increased submarine and aircraft carrier production benefited Newport News, while higher program activity across Warfare Systems, Global Security, and Unmanned Systems contributed to the growth of Mission Technologies.
The Zacks Consensus Estimate for second-quarter 2026 earnings is pegged at $3.80 per share, indicating a decrease of 1.6% from the year-ago reported figure. HII currently has an Earnings ESP of +0.53% and a Zacks Rank of 3.
Huntington Ingalls Industries, Inc. Price and EPS Surprise
Huntington Ingalls Industries, Inc. price-eps-surprise | Huntington Ingalls Industries, Inc. Quote
L3Harris Technologies is a technology-oriented aerospace and defense player that delivers advanced defense technologies across air, land, sea, space and cyber domains. Higher demand for resilient communications, classified ISR and space programs, international defense platforms, and increased production across missile, munitions, and electronic warfare programs likely supported broad-based revenue growth across the company's major defense segments in the to-be-reported quarter. Continued momentum in the Space Development Agency's Tracking Tranche 3 program and Aerojet Rocketdyne's propulsion businesses must have further strengthened growth prospects.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.80 per share, indicating an improvement of 0.7% from the year-ago quarter’s reported figure. LHX currently has an Earnings ESP of +2.09% and a Zacks Rank of 3.
L3Harris Technologies Inc Price and EPS Surprise
L3Harris Technologies Inc price-eps-surprise | L3Harris Technologies Inc Quote
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Dynamics Corporation (GD): Free Stock Analysis Report
Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report
Curtiss-Wright Corporation (CW): Free Stock Analysis Report
L3Harris Technologies Inc (LHX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).