Defense Watch: Strong Q3 Earnings, New Military Contracts, But Democrats’ Sweep Poses Spending Hurdles

Curtiss-Wright, Leidos and BWX Technologies reported strong Q3 results this week, citing sharp growth in defense business.

• Lockheed Martin, Boeing and Curtiss-Wright secured fresh U.S. Navy contracts worth multi-million dollars.
• Leonardo DRS announced a partnership with AeroVironment to develop anti-drone laser systems.
• Democrats winning in the midterm elections raised concerns that Donald Trump’s proposed $1.5-trillion defense budget for 2027 could face cuts.

Several factors kept U.S. defense contractors in the spotlight this week. While companies reported quarterly top-line growth and secured multi-million-dollar contracts, a ‘Blue Sweep’ in the mid-term elections has raised concerns over the Trump administration’s proposed military spending.

Several defense stocks, including Lockheed Martin (LMT), L3Harris (LHX), RTX Corp. (RTX) and Northrop Grumman (NOC), closed in the red on Wednesday, with analysts noting that a Democratic-led House could put defense budgets under greater scrutiny.

The latest developments followed a strong earnings week for L3Harris, Boeing (BA) and HII (HII), which reported growing defense revenue and record order backlogs.

Analysts See Challenges To Trump-Related Proposals After Blue Sweep

Jefferies expects the defense budget for 2027 to be closer to the House’s $1.15 trillion proposal than the administration’s $1.5 trillion request, according to a report by Reuters.

TD Cowen analyst Roman Schweizer added that “Trump branded programs are ‌dead,” highlighting the Golden Dome, the homeland missile defense shield and the Golden Fleet projects. However, the analyst also added that nuclear modernization defense programs were “least ​at risk.”

Defense Demand Drives Q3 Growth For Curtiss-Wright, Leidos And BWXT

On Wednesday, Curtiss-Wright (CW) reported a 10% increase in third-quarter (Q3) revenue to $953 million, while adjusted earnings per share (EPS) rose 16% to $3.94. Both these figures beat Wall Street’s estimates of $935.1 million and $3.76, respectively, according to Fiscal.ai.

The company cited the beat as driven by strong performance in the Aerospace & Defense division, which posted 9% topline growth. It also secured $1.1 billion in new orders during the quarter, taking its backlog to $4.6 billion.

Strong demand for defense electronics, fighter jet equipment, and submarine components prompted Curtiss-Wright to raise its full-year 2026 adjusted EPS forecast to$15.60 from 15.10–$ 15.40.

Leidos (LDOS) also posted higher Q3 revenue of $4.63 billion, while adjusted EPS increased 19% to $3.62. Earnings comfortably beat consensus estimates of $3.03, but revenue fell marginally short of the Street’s forecast.

Still, the company saw increased customer demand for defense tech products and raised its FY2026 adjusted earnings outlook to 12.50–12.70 per share. Net bookings came in at $5.5 billion, taking its backlog to $49.6 billion.

On Monday, nuclear technology supplier BWX Technologies (BWXT) reported a 10% jump in Q3 revenue to $953 million, though it came in below estimates of $971 million. However, its adjusted EPS of $1.26 beat estimates of $1.19.

Operating income from its Government operations surged 26%, with the company highlighting the selection of its nuclear reactor technology for the U.S. Army’s Janus program. Preliminary FY2027 revenue is expected to grow in the high single digits.

Lockheed, Boeing And Curtiss-Wright’s Multi-Million Dollar Contracts

Alongside its Q3 print, Curtiss-Wright announced contracts worth more than $225 million to supply propulsion equipment and control systems for the U.S. Navy’s Virginia-class and Columbia-class submarines and Ford-class aircraft carriers. The work is expected to continue through 2030.

Lockheed Martin (LMT) received a $122.4 million U.S. Navy contract on Wednesday to support the Trident II submarine-launched ballistic missile system, including navigation-system development, according to The Fly.

Boeing also secured a $119.7 million contract modification to upgrade nine P-8A Poseidon maritime patrol aircraft operated by the U.S. Navy and Royal Australian Air Force.

On Monday, Leonardo DRS (DRS) announced that AeroVironment (AVAV) selected it to support production of the U.S. Army’s Enduring High-Energy Laser system. Leonardo DRS is expected to provide power and cooling technologies for AeroVironment’s Locust X3 laser system.

How Have CW, BWXT, And LDOS Shares Fared In 2026?

Retail sentiment on Stocktwits was ‘bullish’ for CW, while sentiment for BWXT and LDOS was ‘bearish’ and ‘neutral,’ respectively.

CW, LDOS, and BWXT stocks have been under selling pressure this year, having fallen 21%, 26%, and 30%, respectively. The broader Global X Defense Tech ETF (SHLD) is down about 8% so far this year.

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