This article looks at the 11 Best Military Drone Stocks to Buy According to Hedge Funds.Demand for next-generation, low-cost military technology has surged in recent times as countries modernize their militaries with AI-powered drones and unmanned vehicles that are cheap and cut dependence on ground forces.Swarms of UAVs, guided by AI, now fill the skies and can strike enemy targets with pinpoint accuracy. These aerial vehicles offer a bird’s eye view of the battlefield, making it difficult for targets to m ...

Core Insights - Howmet Aerospace Inc. (HWM) and Textron Inc. (TXT) are key players in the aerospace and defense industry, producing aircraft components for both commercial and military applications [1][2] Howmet Aerospace Inc. (HWM) - HWM's primary growth driver is the commercial aerospace market, with revenues increasing by 8% year-over-year in Q2 2025, accounting for 52% of its business [3] - The defense sector is also performing well, with a 21% year-over-year revenue increase in Q2 2025, representing 17% of total revenues [4] - The U.S. Defense Appropriations Act for FY 2026 allocates $831.5 billion, which is expected to benefit HWM's defense contracts [5] - HWM has a strong shareholder return policy, paying $83 million in dividends and repurchasing $300 million in shares in the first half of 2025, with a 20% dividend increase announced in August 2025 [6] Textron Inc. (TXT) - Textron's Aviation business unit has seen a revenue growth of 2.8% year-over-year in Q2 2025, supported by strong air passenger traffic and a backlog of $7.85 billion [7] - The defense segment is also performing well, with contracts signed for military aircraft, indicating solid demand [8] - Textron's cash and cash equivalents stood at $1.43 billion, with long-term debt at $3.38 billion, suggesting a solid short-term solvency position [11] - However, supply chain issues and labor shortages may hinder Textron's production capabilities and profitability [12][13] Performance Comparison - HWM shares have increased by 90.7% over the past year, while TXT shares have decreased by 3.2% [16] - The Zacks Consensus Estimate for HWM indicates a 9.4% growth in sales and a 32.7% increase in EPS for 2025, while TXT's estimates show 8.1% sales growth and 11.5% EPS growth [17][18] - HWM's forward price-to-earnings ratio is significantly higher at 46.49X compared to TXT's 12.58X, indicating a steeper valuation for HWM [19] Final Assessment - HWM's leadership in both commercial and defense markets positions it favorably for long-term growth, despite its higher valuation [22] - Textron has strong momentum in the commercial aerospace sector but faces challenges from supply chain issues [21] - Overall, HWM is viewed as the better investment option compared to TXT due to stronger growth estimates and stock performance [22][23]

Core Points - Textron Inc. will release its third quarter 2025 financial results on October 23, 2025 [1] - A conference call will be held at 8:00 a.m. Eastern Time to discuss the results and the company's outlook [1] - The conference call will be accessible via webcast and direct dial for both U.S. and international participants [1] - A recorded version of the call will be available for playback [1]

Core Insights - Textron Inc.'s subsidiary, Textron Systems Corporation, has delivered the XM204 Top Attack Munition to the U.S. Army for operations in Europe under a low-rate initial manufacturing contract [1][10] Group 1: Textron's Expertise and Product Features - Textron Systems has over 30 years of experience in developing terrain-shaping systems to support the U.S. Army's counter-mobility needs [2] - The XM204 system features four sensor-fused munitions, covering a 100-meter diameter strike zone, making it effective against heavy wheeled and tracked vehicles [4][10] - The XM204 includes advanced safety features, is portable, and has a self-destruct mechanism to enhance counter-mobility capabilities [4] Group 2: Market Growth Potential - The global precision-guided munition market is projected to grow at a CAGR of 5.1% from 2025 to 2034, driven by increasing demand for precision targeting [6] - Other companies benefiting from this market growth include Lockheed Martin Corp. and L3Harris Technologies, with respective long-term earnings growth rates of 10.3% and 13% [6][7][8] Group 3: Stock Performance - In the past month, Textron's shares have increased by 3.4%, while the industry has seen a growth of 4.4% [11]

Group 1 - Textron Inc. (NYSE: TXT) stock has increased by 22.6% since the last report, which rated the stock as a buy [1] - The stock's performance is noted to be in line with the broader market trends [1] - The Aerospace Forum aims to identify investment opportunities in the aerospace, defense, and airline sectors, leveraging data analytics for informed analysis [1] Group 2 - The analyst behind the report has a background in aerospace engineering, providing context to industry developments and their potential impact on investment theses [1] - The investing group offers direct access to data analytics monitors, enhancing the research capabilities for investors [1]

Core Insights - Textron Inc. (NYSE: TXT) stock has increased by 22.6% since the last report, which rated the stock as a buy, indicating positive stock price performance [1] - The stock's performance aligns with the broader market trends in the aerospace, defense, and airline sectors, suggesting a stable investment environment [1] - The Aerospace Forum aims to identify investment opportunities within the aerospace, defense, and airline industries, leveraging data analytics for informed decision-making [1] Company Analysis - The Aerospace Forum is recognized as a leading investment research service focused on the aerospace, defense, and airline sectors, providing access to proprietary data analytics [1] - The analyst behind the report has a background in aerospace engineering, which enhances the analysis of industry developments and their potential impact on investment strategies [1] - The investment ideas presented are driven by data-informed analysis, emphasizing the importance of analytics in making investment decisions [1]

Core Viewpoint - Textron Aviation Defense has launched a nationwide tour to showcase the Beechcraft M-346N as a comprehensive solution for the U.S. Navy's Undergraduate Jet Training System (UJTS) program [2][4]. Company Overview - Textron Aviation Defense LLC is a subsidiary of Textron Inc., known for its legacy in producing military flight trainers and integrated training systems [10]. - The Beechcraft M-346N is assembled in the U.S. and is backed by Beechcraft's 85-year history of training U.S. military pilots [3][4]. Product Features - The Beechcraft M-346N is a twin-engine, tandem-seat aircraft equipped with advanced digital flight controls, fly-by-wire systems, and innovative safety features such as the Automatic Ground Collision Avoidance System (Auto-GCAS) [7]. - The aircraft offers a full training ecosystem, including high-fidelity ground-based devices, AI-powered instruction, and a Live-Virtual-Constructive (LVC) architecture [5]. - It is powered by two Honeywell F124-GA-200 turbofan engines, achieving a maximum cruise speed of over 590 knots and a service ceiling of 45,000 feet [8]. Performance and Reliability - Over 100 M-346 aircraft produced by Leonardo have logged more than 150,000 flight hours, demonstrating exceptional performance and reliability for 20 global users [6]. - The M-346N is designed to bridge basic instruction and high-performance carrier-based fighter operations, enhancing student readiness and reducing training risk [9]. Strategic Partnerships - Textron Aviation Defense has entered a teaming agreement with Leonardo to meet the U.S. Navy's requirements for the new jet trainer [4].

Core Insights - The article highlights the effectiveness of value investing as a strategy that has consistently performed well across various market conditions [2] - Textron (TXT) is identified as a strong value stock, currently holding a Zacks Rank of 2 (Buy) and an "A" grade in the Value category [4][3] Financial Metrics - Textron has a P/E ratio of 12.45, significantly lower than the industry average of 27.94, indicating potential undervaluation [4] - The PEG ratio for Textron is 1.24, compared to the industry's average of 2.02, suggesting that the stock is reasonably priced relative to its expected earnings growth [5] - The P/S ratio for Textron stands at 1.03, while the industry average is 2.3, further supporting the notion of undervaluation [6] - Textron's P/CF ratio is 12.17, which is attractive compared to the industry's average of 33.83, indicating strong cash flow relative to its valuation [7] Investment Outlook - The combination of these financial metrics suggests that Textron is likely undervalued at present, making it an appealing option for value investors [8]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks in the market [2]. Company Summary: Textron (TXT) - Textron (TXT) currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - The stock is trading at a P/E ratio of 12.13, significantly lower than the industry average of 27.48, suggesting it may be undervalued [4]. - TXT's Forward P/E has fluctuated between 9.69 and 14.02 over the past year, with a median of 12.08 [4]. - The PEG ratio for TXT is 1.21, which is lower than the industry average of 1.98, indicating favorable growth expectations relative to its valuation [5]. - TXT's PEG has ranged from 0.97 to 1.39 in the past year, with a median of 1.20 [5]. - The P/S ratio for TXT is 1, compared to the industry average of 2.29, further supporting the notion of undervaluation [6]. - TXT has a P/CF ratio of 11.79, which is attractive compared to the industry's average of 33.21, highlighting its strong cash flow outlook [7]. - Overall, the metrics suggest that Textron is likely undervalued, making it one of the strongest value stocks in the market [8].

Financial Data and Key Metrics Changes - Total revenue reached approximately €190 million, reflecting a strong performance with a growth of 37% year-over-year, and an organic growth of 9% [4][21] - EBITDA increased to €27.5 million, representing a growth of 57% compared to the same period last year, with an EBITDA margin of 14.6% [4][24] - The gross margin improved from 32.8% in 2024 to 38.2% in the first half of 2025 [22] Business Line Data and Key Metrics Changes - The Smart Solutions division grew by 72%, achieving a top line of €44 million, with an EBITDA margin around 18% [5][6] - Digital Advisory division experienced a growth of 63%, while Software Engineering grew by 22%, mainly due to the integration of the WebGenesis business [6][16] - Overall EBITDA growth was significant across all business lines, particularly in Smart Solutions with a 75% increase [6][21] Market Data and Key Metrics Changes - International revenue accounted for €31 million, representing 16% of total revenue, which is lower than the previous year due to the integration of domestic companies [8] - Strategic areas such as Aerospace and Defense, Banking and Finance, and Public Sector are growing in contribution, while Tech, Industrial, and Automotive sectors are seeing a decrease in their contribution [10] Company Strategy and Development Direction - The company aims to accelerate growth in the Smart Solutions division, which is the most profitable [5] - Continued investment in R&D, totaling €12 million, reflects a 75% increase compared to the same period last year, focusing on innovative technology [7] - The three-year business plan includes a mix of continuity and M&A strategies, targeting a 10% growth rate [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving an average growth of 5% to 6% for the Software Engineering division despite fluctuations in quarterly performance [39] - The outlook for the second half of the year is positive, with expectations to exceed the defined guidance [18] - The company is scouting for additional M&A opportunities to enhance growth [19][20] Other Important Information - The company made a strategic investment in Altilia, focusing on artificial intelligence, with plans to increase stakes in the future [11][12] - The net debt as of June 2025 stood at €112 million, in line with guidance, and below two times the year EBITDA [9][29] Q&A Session Summary Question: What drove the change in trend for the Software Engineering business? - The Software Engineering business is linked to large projects, leading to variable performance. A strong Q2 last year made it difficult to achieve similar results this year, particularly in the telco industry, which is experiencing low investment [37][38] Question: What is the rationale behind the partial exit from Banco del Fucino? - The strategy remains unchanged; however, market conditions necessitated a two-step approach for the sale due to regulatory constraints on shareholding in banking institutions [40][41] Question: What is the expected timing for new M&A deals? - The company plans to make one to two small acquisitions in 2025, with larger deals anticipated in 2026. Current negotiations are in advanced stages for a small acquisition in the U.S. [43][46]