As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the defense contractors industry, including Lockheed Martin (NYSE: LMT) and its peers.

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

The 14 defense contractors stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was in line.

Luckily, defense contractors stocks have performed well with share prices up 18.9% on average since the latest earnings results.

Lockheed Martin (NYSE: LMT)

Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.

Lockheed Martin reported revenues of $18.61 billion, up 8.8% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ backlog estimates and full-year EPS guidance beating analysts’ expectations.

"Based on the effectiveness and reliability of our products and systems, strong demand from Lockheed Martin's customers—both in the United States and among our allies—continues. As a result of this unprecedented demand, we are increasing production capacity significantly across a wide range of our lines of business," said Lockheed Martin Chairman, President, and CEO Jim Taiclet.

Interestingly, the stock is up 15.1% since reporting and currently trades at $582.54.

Is now the time to buy Lockheed Martin? Access our full analysis of the earnings results here, it’s free.

Best Q3: RTX (NYSE: RTX)

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

RTX reported revenues of $22.48 billion, up 11.9% year on year, outperforming analysts’ expectations by 5.4%. The business had a stunning quarter with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 25.8% since reporting. It currently trades at $202.53.

Is now the time to buy RTX? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: AeroVironment (NASDAQ: AVAV)

Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

AeroVironment reported revenues of $472.5 million, up 151% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a slower quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.

Interestingly, the stock is up 40.1% since the results and currently trades at $395.20.

Read our full analysis of AeroVironment’s results here.

Mercury Systems (NASDAQ: MRCY)

Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.

Mercury Systems reported revenues of $225.2 million, up 10.2% year on year. This number topped analysts’ expectations by 9.5%. It was an exceptional quarter as it also put up an impressive beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates.

Mercury Systems scored the biggest analyst estimates beat among its peers. The stock is up 36% since reporting and currently trades at $103.

Read our full, actionable report on Mercury Systems here, it’s free.

Leidos (NYSE: LDOS)

Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.

Leidos reported revenues of $4.47 billion, up 6.7% year on year. This print beat analysts’ expectations by 4.1%. Overall, it was an exceptional quarter as it also produced a solid beat of analysts’ backlog estimates and an impressive beat of analysts’ EBITDA estimates.

The stock is flat since reporting and currently trades at $194.77.

Read our full, actionable report on Leidos here, it’s free.

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