The Zacks Aerospace sector’s fourth-quarter 2025 earnings are expected to outperform, driven by strong order activity amid rising geopolitical tensions, solid defense spending, increased demand for advanced technologies, ongoing military modernization and a recovery in commercial aerospace. Per the latest Earnings Preview, the sector’s quarterly earnings are expected to rise 51.6% on 17.3% higher revenues.
With the assistance of the Zacks Stock Screener, we have identified four defense stocks, namely BWX Technologies BWXT, Curtiss-Wright CW, CAE Inc. CAE and Rocket Lab Corporation RKLB, which are poised to beat on earnings this reporting cycle.
These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors That May Influence Defense Stocks’ Q4 Results
U.S. defense stocks are expected to have delivered solid performance in the fourth quarter, supported by heightened geopolitical tensions that encouraged governments to maintain or expand defense spending.
This is likely to have translated into higher order inflows and long-term contract awards, especially for companies focused on advanced and next-generation technologies, such as artificial intelligence, unmanned systems, cyber security, space-based capabilities and missile defense.
Ongoing military modernization programs and large-scale procurement initiatives might have further strengthened revenue visibility and earnings prospects, allowing the defense sector to outperform the broader market.
In addition, defense companies with exposure to commercial aerospace are likely to have benefited from the steady recovery in global air travel, supporting demand for aircraft, engines, and related components alongside their core defense businesses.
However, these positives must have been partially offset by persistent challenges, including skilled labor shortages and supply-chain disruptions. U.S. tariffs on key trading partners might have increased costs and delayed production and deliveries, tempering overall fourth-quarter performance of some defense companies.
Potential Defense Outperformers
BWX Technologies supplies precision manufactured components and services to the commercial nuclear power industry. The company offers technical, management and site services to governments in complex facilities and environmental remediation activities. BWXT’s fourth-quarter earnings are expected to have benefited from the company’s long-standing role as a supplier of nuclear reactors and fuel for U.S. Navy submarines and aircraft carriers.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 91 cents per share, indicating a decrease of 1.1% from the year-ago reported figure. BWXT currently has an Earnings ESP of +4.71% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
BWX Technologies, Inc. Price and EPS Surprise
BWX Technologies, Inc. price-eps-surprise | BWX Technologies, Inc. Quote
Curtiss-Wright provides highly engineered products and services for high-performance platforms, and critical applications in key areas such as commercial aerospace and defense electronics, reactor coolant pumps for next-generation nuclear reactors as well as advanced surface treatment technologies. The company’s quarterly performance is expected to have gained from its continued diversified portfolio, strong demand for defense technologies and servicing existing nuclear reactors and supplying new.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.66 per share, indicating an increase of 11.9% from the year-ago reported figure. CW currently has an Earnings ESP of +0.67% and a Zacks Rank #3.
Curtiss-Wright Corporation Price and EPS Surprise
Curtiss-Wright Corporation price-eps-surprise | Curtiss-Wright Corporation Quote
CAE is a renowned provider of simulation and modeling technologies, and integrated training services to the civil aviation industry and defense forces around the globe. CAE's Civil business continues to benefit from strong and durable fundamentals in a secular growth market for aviation training solutions. The company’s quarterly performance is expected to have continued to benefit from solid utilization rates in commercial and business aviation training as airlines address pilot shortages.
The Zacks Consensus Estimate for fiscal third-quarter 2026 earnings is pegged at 22 cents per share, indicating an increase of 4.8% from the year-ago reported figure. CAE currently has an Earnings ESP of +0.57% and a Zacks Rank #2.
CAE Inc Price and EPS Surprise
CAE Inc price-eps-surprise | CAE Inc Quote
Rocket Lab is a space company, which provides launch services and space systems solutions principally in the United States, Canada, Japan and internationally. In December 2025, the company announced that it had successfully completed 21 launches. This demonstrates high operational reliability and execution capability. Overall, the strong launch performance helps Rocket Lab capitalize on the broader defense spending environment, strengthening its competitive position. This is likely to have had a positive impact in the to-be-reported quarter.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at a loss of 5 cents per share, indicating an improvement of 50% from the year-ago quarter’s reported loss. RKLB currently has an Earnings ESP of +4.76% and a Zacks Rank #3.
Rocket Lab Corporation Price and EPS Surprise
Rocket Lab Corporation price-eps-surprise | Rocket Lab Corporation Quote
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CAE Inc (CAE) : Free Stock Analysis Report
BWX Technologies, Inc. (BWXT) : Free Stock Analysis Report
Rocket Lab Corporation (RKLB) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
