Airbus(US:EADSY) ZACKSยท2025-07-31 15:46Core Insights - Rising U.S. defense spending is expected to benefit aerospace-defense firms focused on military aerospace, despite ongoing supply-chain challenges [1] - Strong global air passenger growth, which increased by 5% year over year and is projected to rise by 5.8% in 2025, provides a positive outlook for commercial aerospace players [1] - The aerospace-defense industry is characterized by companies that design and manufacture military and commercial aircraft, as well as related systems and services [2][3] Industry Trends - Impressive air traffic outlook is boosting growth prospects, with industry-wide revenue per kilometer (RPK) rising by 5% year over year to 806 billion [4] - The U.S. defense budget is a growth catalyst, with a proposed 13% increase to $1.01 trillion for fiscal 2026, enhancing contract opportunities for defense-focused companies [5] - Supply-chain issues continue to hinder growth, with a record backlog of 17,000 jets due to delivery delays and new U.S. tariffs exacerbating the situation [6][7] Industry Performance - The Zacks Aerospace-Defense industry ranks 62, placing it in the top 25% of over 250 Zacks industries, indicating bright near-term prospects [8][9] - The industry has underperformed compared to the Zacks S&P 500 composite and its own sector, with a collective gain of 14.1% versus 22.6% for the Aerospace sector and 17.4% for the S&P 500 over the past year [10] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/Sales ratio of 3.17, compared to the S&P 500's 5.51 and the sector's 3.36 [13] Company Highlights - GE Aerospace reported a 21% year-over-year revenue increase to $11 billion, with earnings per share improving by 64.3% [16] - Airbus Group's revenues improved by 3% year over year, with earnings per share surging by 86% [20] - Huntington Ingalls secured a $74 million task order for modeling and simulation capabilities for the U.S. Air Force, indicating strong demand for its services [23]