Archer Aviation (ACHR) ZACKS·2025-02-17 16:01Core Insights - Strong year-over-year growth in global air passenger demand is expected to benefit aerospace-defense companies, particularly in commercial aerospace, due to increased need for new aircraft and fleet upgrades [1] - Persistent supply-chain disruptions may hinder jet deliveries, posing challenges for industry players [1] - Increased U.S. defense funding is anticipated to benefit aerospace-defense firms focused on combat [1] Industry Overview - The Zacks Aerospace-Defense industry includes companies that design and manufacture heavy-built products such as commercial and military jets, helicopters, combat vehicles, missiles, and military satellites [2] - The industry also encompasses cybersecurity firms providing IT services and C4ISR solutions, with revenue from defense contractors offering spare parts and aircraft modifications [3] Trends Influencing the Industry - Improved air traffic outlook is boosting growth prospects, with global air passenger demand increasing by 8.6% year-over-year in December 2024, and a projected growth of 6.7% in 2025 [4] - The expanding defense budget is a growth catalyst, with the U.S. Senate approving 4.66 since November 30 [10] - The industry has underperformed the S&P 500 and its own sector, with a collective loss of 5.4% over the past year [11] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/Sales ratio of 2.22, compared to the S&P 500's 5.33 and the sector's 2.51 [13] Notable Companies - Archer Aviation: Raised 1.04 [15][16] - Leidos Holdings: Reported a 10% revenue growth to $4.4 billion in Q4 2024, with a long-term earnings growth rate of 7.4% [17][18] - RTX Corp.: Successfully completed a live-fire test of its air defense sensor, with a projected sales improvement of 4.4% for 2025 [21][22] - Redwire Corp.: Awarded a contract for spacecraft design for an astrophysics mission, with a projected sales increase of 77.4% for 2025 [23][24]