Why Lockheed Martin and SAIC Stocks Popped, but GE Aerospace Dropped

Group 1: Market Trends and Defense Spending - European Commission President Ursula von der Leyen announced an 800 billion euro ($841 billion) "REARM Europe" program to enhance military capabilities and support Ukraine, which may lead to increased purchases from U.S. defense contractors [3] - Citigroup suggested that recent declines in defense stock prices combined with potential European spending indicate it is time to buy defense stocks, highlighting a projected increase of$300 billion in the U.S. defense budget over the next 10 years [4] - Wells Fargo noted that defense stocks are becoming "interesting" and raised its price target on Lockheed Martin, reflecting a growing positive sentiment on Wall Street [5] Group 2: Company Valuations - Lockheed Martin's current price-to-earnings (P/E) ratio is 21.2, which is lower than the S&P 500 average of 28.8, but its price-to-sales (P/S) ratio of 1.6 and enterprise value-to-sales ratio of 1.8 indicate it is 43% more expensive than its 20-year average [7] - Science Applications International Corporation (SAIC) has a more attractive valuation with a P/E ratio of 17.9 and a P/S ratio of 0.8, along with significantly higher free cash flow compared to net income [8] - GE Aerospace's valuation is complex due to its hybrid business model, with a P/S ratio of 5.5 and a P/E ratio of nearly 32, which appear expensive given its cash flow generation [9][10]