A Look Back at Aerospace and Defense Stocks’ Q2 Earnings: Axon (NASDAQ:AXON) Vs The Rest Of The Pack
Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Axon (NASDAQ:AXON) and its peers.
Emissions and automation are important in aerospace, so companies that boast advances in these areas can take market share. On the defense side, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression toward Taiwan–have highlighted the need for consistent or even elevated defense spending. As for challenges, demand for aerospace and defense products can ebb and flow with economic cycles and national defense budgets, which are unpredictable and particularly painful for companies with high fixed costs.
The 32 aerospace and defense stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was 1.9% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Luckily, aerospace and defense stocks have performed well with share prices up 13.8% on average since the latest earnings results.
Axon (NASDAQ:AXON)
Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Axon reported revenues of $504.1 million, up 34.6% year on year. This print exceeded analysts’ expectations by 5.4%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ earnings estimates and full-year revenue guidance exceeding analysts’ expectations.
Interestingly, the stock is up 41% since reporting and currently trades at $416.15.
Best Q2: 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 $248.6 million, down 1.8% year on year, outperforming analysts’ expectations by 7.8%. The business had an incredible quarter with an impressive beat of analysts’ organic revenue and earnings estimates.
The market seems happy with the results as the stock is up 9.6% since reporting. It currently trades at $37.28.
Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: AerSale (NASDAQ:ASLE)
Providing a one-stop shop that integrates multiple services and product offerings, AerSale (NASDAQ:ASLE) delivers full-service support to mid-life commercial aircraft.
AerSale reported revenues of $77.1 million, up 11.2% year on year, falling short of analysts’ expectations by 12.7%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
AerSale delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 12.2% since the results and currently trades at $4.89.
Read our full analysis of AerSale’s results here.
General Dynamics (NYSE:GD)
Creator of the famous M1 Abrahms tank, General Dynamics (NYSE:GD) develops aerospace, marine systems, combat systems, and information technology products.
General Dynamics reported revenues of $11.98 billion, up 18% year on year. This print beat analysts’ expectations by 4.1%. Taking a step back, it was a slower quarter as it logged a miss of analysts’ backlog sales estimates.
The stock is up 1.6% since reporting and currently trades at $299.01.
Read our full, actionable report on General Dynamics here, it’s free.
HEICO (NYSE:HEI)
Founded in 1957, HEICO (NYSE:HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.
HEICO reported revenues of $992.2 million, up 37.3% year on year. This print was in line with analysts’ expectations. Aside from that, it was a slower quarter as it logged a miss of analysts’ organic revenue estimates.
The stock is up 5.8% since reporting and currently trades at $260.31.
Read our full, actionable report on HEICO here, it’s free.
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