Key Takeaways RKLB's 70.7% six-month stock gain outpaced its industry and sector.Recent mission successes and the coming Neutron launch support RKLB's momentum.RKLB trades at a premium while high operating costs and losses remain key risks.Shares of Rocket Lab USA, Inc. (RKLB) have gained 70.7% in the past six months, surpassing the 6.3% growth of the Zacks Aerospace-Defense Equipment industry. It also outperformed the Zacks Aerospace sector’s growth of 5.4% and the S&P 500’s rise of 17.2%.Image Source: Zac ...

Key Takeaways Kratos Defense shares jumped 14.4% as demand for unmanned and autonomous systems strengthened.New propulsion and microwave electronics facilities expanded KTOS' manufacturing scale and capabilities.KTOS ended Q3 2025 with a $1.48B backlog, supporting revenue visibility despite sector challenges.Kratos Defense & Security Solutions, Inc. (KTOS) shares have rallied 14.4% in the past three months compared with the Zacks Aerospace-Defense Equipment industry’s growth of 0.5%. Rising defense budgets ...

Key Takeaways ATRO has jumped 44.5% in three months, beating its industry and sector.Stronger Q3 results and the BMA acquisition support growth in commercial and military markets.ATRO's sales and earnings estimates for 2025-2026 point to solid expected year-over-year gains.Shares of Astronics Corporation (ATRO) have surged 44.5% in the past three months, outperforming both the Zacks Aerospace-Defense Equipment industry’s decline of 1.5% and the broader Zacks Aerospace sector’s decline of 2.3%. It also came ...

Core Insights - Rocket Lab USA, Inc. (RKLB) shares have increased by 2.2% over the past three months, outperforming the Zacks Aerospace-Defense Equipment industry growth of 1.1%, but underperforming the Zacks Aerospace sector's growth of 3.7% and the S&P 500's rise of 7.9% [1] - Other defense equipment stocks, such as AAR Corp. (AIR) and Curtiss-Wright Corporation (CW), have shown stronger performance, with AIR gaining 6.3% and CW gaining 12.1% in the same period [2] Performance Drivers - RKLB's recent performance is attributed to strong quarterly results, notable milestones, and contract wins, which have bolstered investor confidence [4] - The company reported a revenue growth of 48% in its third-quarter 2025 results, alongside an improvement in net losses compared to the previous year [4] - Significant milestones include the successful launch of two Explorer-class spacecraft for NASA and the University of California, Berkeley, for the ESCAPADE mission to Mars [5] - RKLB completed its 74th Electron mission, deploying a satellite for the Institute for Q-shu Pioneers of Space (iQPS), reinforcing its position as a primary launch partner for Earth-imaging [6] - The company is preparing for its first Neutron rocket launch, expected in the second half of 2025, which will expand its launch capacity and competitive positioning in the space industry [10] Financial Estimates - The Zacks Consensus Estimate for RKLB's 2025 revenues indicates a solid improvement of 36% from the prior year, with estimates for earnings also showing significant growth [12] - Current estimates for Q4 2025 revenue stand at $176.40 million, with a year-over-year growth estimate of 33.24% [13] Valuation Metrics - RKLB shares are trading at a premium, with a forward 12-month Price/Sales (P/S F12M) ratio of 26.59X, compared to the industry average of 9.28X [15] - Industry peers AIR and CW are trading at lower P/S F12M ratios of 0.98X and 5.57X, respectively [16]

Core Insights - Kratos Defense & Security Solutions, Inc. (KTOS) shares have increased by 200.2% year to date, significantly outperforming the Zacks Aerospace-Defense Equipment industry's growth of 25.7, driven by strong demand for unmanned systems [1][7] - The company is a leading producer of drones and related technology, which is critical in modern warfare [1][4] Performance Comparison - Other defense equipment stocks, such as BWX Technologies (BWXT) and CurtissWright (CW), have also shown strong performance, with share gains of 78.7% and 65.8%, respectively, year to date [2] Growth Drivers - Kratos Defense is a key provider of unmanned aerial target drone systems for the U.S. military and allied defense agencies, securing multiple new contracts and strategic partnerships [4] - The Unmanned Systems division reported third-quarter 2025 revenues of $87.2 million, a 35.8% organic increase from $64.2 million a year ago, indicating strong demand [5] - The company announced a definitive agreement to acquire Orbit Technologies Ltd for $356.3 million, enhancing its capabilities in critical communications and expanding its market reach [5][8] - A solid backlog of $1.48 billion by the end of the third quarter of 2025 reflects strong revenue generation prospects [10] Strategic Partnerships - In October 2025, Kratos Defense formed a strategic partnership with Korea Aerospace Industries to advance Manned-Unmanned Teaming (MUM-T) technologies, enhancing operational capabilities in complex defense environments [9] Earnings Estimates - The Zacks Consensus Estimate for 2025 earnings per share (EPS) has remained unchanged, while the estimate for 2026 EPS indicates a slight increase of 1.41% [11] Financial Metrics - KTOS stock's trailing 12-month return on invested capital (ROIC) is below the peer group average, indicating insufficient returns on investments [16] - The forward 12-month price-to-sales (P/S) ratio for KTOS is 8.58X, which is a discount compared to the industry's average of 9.32X [17] Long-term Outlook - Kratos Defense is positioned for long-term growth due to strategic partnerships and a solid backlog of contracts, ensuring future revenue streams [22]

Core Insights - Rocket Lab USA, Inc. (RKLB) is expected to report third-quarter 2025 results on November 10, 2025, with revenue estimates of $149.8 million, reflecting a 42.9% increase year-over-year, and a projected loss of five cents per share, an improvement from the previous year's loss of ten cents [1]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for RKLB's earnings per share (EPS) for the current quarter is -0.05, with a total of three estimates [2]. - Year-over-year growth estimates for EPS indicate a 50% improvement for the current quarter and a 36.84% improvement for the current year [2]. - RKLB's earnings have beaten the Zacks Consensus Estimate once in the last four quarters, with an average negative surprise of 16.22% [2][3]. Revenue Growth Drivers - Revenue growth is anticipated due to an increase in launch missions and strong bookings from previous quarters, particularly in the Launch Services business segment [5][6]. - The Space Systems business segment is also expected to contribute positively to revenue growth through solid performance in spacecraft and satellite manufacturing [7][8]. Cost Considerations - Despite strong revenue projections, increased operating costs related to the Neutron program, workforce expansion, and rising R&D and IT-related expenses may negatively impact operating margins and overall earnings [9]. Stock Performance and Valuation - RKLB's stock has increased by 332.3% over the past year, significantly outperforming the Zacks aerospace-defense equipment industry's growth of 26.3% [10]. - The forward 12-month price-to-sales (P/S) ratio for RKLB is 33.39X, which is higher than the industry average of 9.47X, indicating a premium valuation [11][13]. Industry Outlook - The global space economy is projected to reach $1.8 trillion by 2035, driven by the adoption of satellite-based and rocket-enabled technologies, which supports the long-term growth potential for companies like RKLB [14]. - However, RKLB faces challenges from elevated operating expenses due to ongoing investments in product development and technology enhancements, which may offset revenue growth benefits [15]. Investment Considerations - Given RKLB's favorable Zacks Rank and solid revenue growth expectations, the company is less likely to disappoint in its upcoming earnings report [16].

Core Insights - Kratos Defense & Security Solutions, Inc. (KTOS) shares have increased by 280.4% over the past year, significantly outperforming the Zacks Aerospace-Defense Equipment industry's growth of 34% [1][8] - The company's growth is supported by its role as the primary unmanned aerial target drone provider for the U.S. Army and stable funding from the U.S. government [1][4] Performance Comparison - Other defense equipment stocks, such as AAR Corporation (AIR) and Rocket Lab USA, Inc. (RKLB), have also shown strong performance, with AIR shares up 34.4% and RKLB shares up 558.1% over the same period [3] Factors Driving Stock Price Increase - Notable contract wins and new product launches are key catalysts for boosting investor confidence and share price appreciation for aerospace-defense manufacturers like Kratos Defense [5] - In October 2025, Kratos introduced the "Ragnarök" Low-Cost Cruise Missile (LCCM) system, enhancing tactical strike capabilities [6] - The company secured a Phase 1 contract for developing sustainment capabilities for the U.S. Navy's AN/SPY-1 radar systems, establishing a foundation for the Integrated Radar Innovation Center [7] - Kratos received a $1.45 billion contract for the Multi-Service Advanced Capability Hypersonic Test Bed (MACH-TB) 2.0 program, marking its largest award to date [9] Future Growth Prospects - Kratos is diversifying its product line beyond drones, particularly in hypersonics, with ongoing orders for Erinyes and DarkFury hypersonic vehicles [11] - The company is investing $50 million in a new 68,000-square-foot Hypersonic System Payload Integration Facility in Crane, IN, to support hypersonic product development [11] - By the end of Q2 2025, Kratos had a solid backlog of $1.41 billion, indicating strong revenue generation prospects [12] Financial Estimates - The Zacks Consensus Estimate for KTOS' 2025 sales indicates a year-over-year increase of 15.7%, with earnings per share (EPS) expected to rise by 4.1% [13] - Current estimates for sales and EPS reflect positive growth trends for both 2025 and 2026 [14][15] Valuation and Investment Considerations - KTOS shares are trading at a forward 12-month price-to-sales (P/S) ratio of 10.91X, which is a premium compared to the industry average of 9.87X [20] - Despite strong growth prospects, the company faces challenges such as supply chain disruptions and potential funding cuts due to federal budget pressures [16][17] - The trailing 12-month return on invested capital (ROIC) for KTOS is below the peer group average, indicating insufficient returns on investments [18]

Core Insights - Aerospace-Defense Equipment stocks are expected to benefit from strategic mergers and acquisitions that enhance operational scale and market presence, despite ongoing supply-chain challenges affecting aircraft deliveries and profitability [1][3][5] Industry Overview - The Zacks Aerospace-Defense Equipment industry includes companies that manufacture essential components for aerospace and defense, such as aerostructures, propulsion systems, and defense electronics, while also providing aftermarket support and services [2] Trends Influencing the Industry - Mergers and Acquisitions: Recent acquisitions, such as TransDigm's purchase of Simmonds Precision Products for $765 million and AAR Corp.'s acquisition of American Distributors for $146 million, are expected to improve economies of scale and revenue growth across the industry [3] - Air Traffic Growth: Global air passenger traffic increased by 4.6% year-over-year in August 2025, with projections of a 5.8% growth for 2025, indicating a positive outlook for aerospace and defense companies serving the commercial aviation market [4] - Supply-Chain Disruptions: Ongoing supply-chain issues have led to aircraft deliveries being approximately 30% below previous peaks, resulting in a backlog of 17,000 units, which may hinder production and profitability in the near term [5] Industry Performance - The Zacks Aerospace-Defense Equipment industry has outperformed both the S&P 500 and the broader Aerospace sector, with a collective stock increase of 37.3% over the past year compared to 25.7% for the sector and 18.1% for the S&P 500 [8] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/Sales ratio of 11.49X, significantly higher than the S&P 500's 5.73X and the sector's 3.43X, indicating strong market valuation [10] Notable Companies - **Curtiss-Wright Corp. (CW)**: This company focuses on high-performance products for aerospace and defense, with a projected 9.7% sales growth and 18.4% earnings growth for 2025. It has announced a $200 million expansion of its share repurchase program [13][14] - **Leonardo DRS, Inc. (DRS)**: Specializing in advanced defense technologies, DRS is expected to see a 10.9% increase in sales and 19.4% growth in earnings for 2025, bolstered by the launch of new AI-enabled display systems [17][18] - **BWX Technologies (BWXT)**: This company provides nuclear solutions and has secured a $1.6 billion contract from the Department of Energy, with projected sales growth of 15.1% and earnings growth of 11.7% for 2025 [20][21]

Core Insights - The aerospace and defense sector continues to attract investment due to rising global defense spending, which reached a record $2.3 trillion last year, increasing over 8% and expected to maintain momentum into 2025 [1][2]. Company Performance - GE Aerospace and Howmet Aerospace are leading in engineered solutions for defense and commercial aircraft, benefiting from a shift towards fuel-efficient aircraft as airlines upgrade their fleets [3]. - GE's revenue increased by 23% year-over-year in Q2 to $10.15 billion, driven by high demand for its LEAP GEnx and GE9X engines [4]. - Howmet reported record Q2 revenue of $2.05 billion, attributed to high demand for engine spares, achieving peak profits and cash flow [4]. - Both GE and Howmet are projected to experience high double-digit EPS growth in the foreseeable future, with GE holding a Zacks Rank 3 (Hold) and Howmet a Zacks Rank 2 (Buy) [5]. Niche Equipment Providers - Astronics and TAT Technologies have gained investor interest as specialized aerospace defense equipment providers [7]. - Astronics' stock has surged nearly 200% this year and currently holds a Zacks Rank 2 (Buy), with positive EPS revisions indicating further upside potential [8]. - TAT Technologies has also seen positive EPS revisions, maintaining a strong buy status, with its stock hovering near a 52-week high of over $40, up more than 70% year-to-date [8]. Valuation and Market Trends - Both Astronics and TAT Technologies trade at 27X forward earnings, which is a discount compared to the Zacks Aerospace-Defense Equipment Industry average of 34X and closer to the S&P 500 average [11]. - The overall performance of aerospace and defense stocks remains strong, making them attractive for potential buy-the-dip opportunities as global defense spending stays near record levels [12].

Core Viewpoint - Leonardo DRS, Inc. is positioned as a strong investment option in the Aerospace-Defense Equipment industry due to its robust growth, increasing backlog, and solid financial metrics [1] Growth Outlook & Surprise History - The Zacks Consensus Estimate for DRS' 2025 earnings per share (EPS) has risen by 2.8% to $1.11 per share over the last 60 days [2] - Total revenue for DRS in 2025 is projected at $3.59 billion, reflecting a year-over-year growth of 10.9% [2] - The company's long-term earnings growth rate is estimated at 17.3%, with an average earnings surprise of 11.94% over the last four quarters [2] Advanced Sensing Capabilities - DRS leads in Advanced Sensing Technologies, providing systems for targeting, surveillance, and protection through various advanced technologies [3] Rising Backlog - As of June 30, 2025, DRS' total backlog increased by 8.6% to $8.61 billion, driven by new awards in Advanced Sensing and Integrated Mission Systems [4] Liquidity Position - DRS' current ratio at the end of Q2 2025 was 2.11, surpassing the industry average of 1.83, indicating strong short-term liability management [5] Debt Profile - The total debt to capital ratio for DRS is 11.95%, significantly lower than the industry average of 49.30% [6] - The times interest earned (TIE) ratio was 26.4, suggesting the company can comfortably meet its interest obligations [6] Return to Shareholders - DRS has been enhancing shareholder value through dividends and share buybacks, with a 47.2% increase in shares over the past year [8] - The quarterly dividend is currently 9 cents per share, leading to an annualized dividend of 36 cents and a dividend yield of 0.87%, outperforming the industry average of 0.15% [9] Stock Price Performance - Over the past year, DRS shares have increased by 45%, compared to a 33.1% rise in the industry [12]