The Zacks Aerospace sector’s first-quarter 2026 earnings are expected to outperform, driven by heightened order activity amid rising geopolitical tensions. A substantial backlog is providing clear visibility into upcoming revenues, while steady defense budgets, growing demand for cutting-edge technologies, continued military upgrades and a rebound in commercial aviation are further strengthening performance prospects. Per the latest Earnings Preview, the sector’s quarterly earnings are expected to rise 10.9% on 9.9% higher revenues.
With the assistance of the Zacks Stock Screener, we have identified three defense stocks, namely Curtiss-Wright CW, Huntington Ingalls Industries HII and Redwire Corporation RDW, 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’ Q1 Results
U.S. defense stocks are expected to have delivered solid performance in the first quarter. Ongoing conflicts, strategic rivalries and rising uncertainty pushed many governments—particularly the United States and its allies—to either sustain elevated defense budgets or accelerate planned increases. This steady flow of funding tends to benefit large contractors as well as specialized technology providers, creating a favorable backdrop for revenue growth and margin stability.
As a result, defense companies probably saw a pickup in order activity, with governments prioritizing long-term procurement programs over short-term purchases. These contracts often span multiple years and include maintenance, upgrades and lifecycle support, which provide companies with predictable cash flows and strong revenue visibility.
In particular, companies involved in areas such as Artificial Intelligence-driven battlefield systems, autonomous and unmanned platforms (including drones and underwater vehicles), advanced cyber defense infrastructure, and satellite-based communication and surveillance systems are likely to have boosted the bottom line in the to-be-reported quarter.
Ongoing military modernization programs and large-scale procurement initiatives are likely to have further strengthened revenue visibility and earnings prospects, allowing the defense sector to outperform the broader market.
In addition, 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 first-quarter performance of some defense companies.
Potential Defense Outperformers
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 its well-diversified portfolio, sustained demand for defense-related technologies and ongoing work in servicing existing nuclear reactors and supplying components for new ones.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $3.32 per share, indicating an increase of 17.7% from the year-ago reported figure. CW currently has an Earnings ESP of +0.72% and a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.
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 such as aircraft carriers and submarines, and non-nuclear ships, such as surface combatants, expeditionary warfare/amphibious assault and coastal defense surface ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. Higher sales volumes across key programs likely supported growth in all major segments in the first quarter: shipbuilding demand boosted Ingalls, submarine and carrier work lifted Newport News, and increased activity in Warfare Systems, Global Security, and Unmanned Systems strengthened Mission Technologies.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $3.70 per share, indicating a decrease of 2.4% from the year-ago reported figure. HII currently has an Earnings ESP of +3.05% 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
Redwire provides space solutions and components for the space economy, with valuable IP for solar power generation and in-space 3D printing and manufacturing. The company’s quarterly earnings are expected to have benefited from a robust backlog. RDW has continued to reduce debt through refinancing and capital actions, which lowers financial pressure and enables more investment in production. The company has been expanding capacity (such as new manufacturing facilities and vertically integrated production capabilities) and winning government and defense contracts, which are expected to have boosted the top line in the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of 16 cents per share, indicating an improvement of 20% from the year-ago quarter’s reported loss. RDW currently has an Earnings ESP of +22.58% and a Zacks Rank of 3.
Redwire Corporation Price and EPS Surprise
Redwire Corporation price-eps-surprise | Redwire Corporation Quote
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Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).