Zacks Industry Outlook Highlights GE Aerospace, RTX and General Dynamics
For Immediate Release
Chicago, IL – July 10, 2026 – Today, Zacks Equity Research discusses GE Aerospace GE, RTX Corp. RTX and General Dynamics GD.
Industry: Aerospace-Defense
The Zacks Aerospace-Defense industry continues to enjoy favorable long-term fundamentals, supported by rising global defense spending, military modernization initiatives, and increasing geopolitical tensions that are driving demand for advanced defense systems and long-term procurement programs. Commercial aviation also offers attractive growth prospects as global air travel is expected to expand steadily over the coming decades.
However, persistent supply-chain disruptions, labor shortages, and component constraints continue to challenge the industry by delaying aircraft production and deliveries and slowing fleet modernization efforts. The leading companies in the aerospace-defense industry that you might want to keep an eye on are GE Aerospace, RTX Corp. and General Dynamics.
About the Industry
The Zacks Aerospace-Defense industry comprises companies that primarily design and manufacture heavy-built products like commercial as well as military jets and helicopters, tankers and other combat vehicles, missiles, combatant ships as well as auxiliary ships, submarines, bombs, guns, space transportation vehicles, military satellites and a few more.
The industry also includes cybersecurity players that offer information technology services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions. A portion of its revenues comes from defense contractors offering spare parts, aircraft modification, ship repair and overhaul services, and supply-chain management services.
3 Major Trends in the Aerospace-Defense Industry
Growing Defense Spending & Geopolitical Tensions: Heightened geopolitical uncertainty is prompting governments worldwide to accelerate defense modernization and expand military expenditures. As defense priorities shift toward strengthening national security, contractors are increasingly securing long-term procurement programs that extend beyond initial equipment sales to include sustainment, modernization, training, and lifecycle support.
These multi-year programs provide greater revenue visibility, improve cash flow stability, and support sustained earnings growth. Reinforcing this trend, the U.S. Department of War unveiled President Trump's proposed fiscal 2027 defense budget in April 2026, seeking a record $1.5 trillion in funding — approximately 42% higher than current levels. The proposal allocates more than $756.8 billion toward new military capabilities, highlighting continued investment in next-generation defense technologies and the expansion of the U.S. defense industrial base.
Air Traffic View Boosts Opportunities: According to a report by the International Air Transport Association (“IATA”), global air passenger demand is expected to grow 2.1% year over year in 2026. This marks a significant deceleration from the 5.3% growth recorded in 2025. The Middle East region faces a deep traffic contraction due to strictly closed airspaces, forcing massive traffic rerouting. However, according to IATA’s long-term outlook, global air passenger demand is expected to more than double by 2050, at a compound annual growth rate (CAGR) of 3.1% to reach 20.8 trillion Revenue Passenger Kilometers (RPKs). Defense companies, especially those tied to aerospace manufacturing and technology, benefit through technological advances and improved production economics.
Supply-Chain Issues Continue to Act as a Headwind: The Aerospace and Defense industry continues to face supply-chain challenges that originated during the pandemic, when a sharp decline in aircraft demand led suppliers to reduce production capacity, scale back investments, and shrink their workforces. Although demand has recovered strongly, many suppliers are still struggling to ramp up production, resulting in shortages of critical components, longer lead times, and delays in aircraft manufacturing and deliveries.
According to IATA, these supply-chain constraints are limiting airlines' ability to expand capacity to meet robust passenger demand while slowing the replacement of older aircraft with newer, more fuel-efficient models, thereby delaying progress toward the industry's CO2 emissions reduction goals. IATA also noted that constrained aircraft availability, labor shortages, and bottlenecks across the global aerospace supply chain remain significant challenges, affecting the timely production and delivery of aircraft and other essential aerospace systems.
Zacks Industry Rank Reflects Bright Outlook
The Zacks Aerospace-Defense industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #105, which places it in the top 43% of more than 246 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few aerospace-defense stocks that you may want to add to your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Aerospace-Defense industry has underperformed the Zacks S&P 500 composite and its sector over the past year. The stocks in this industry have collectively surged 4.5%, while the Zacks Aerospace sector has soared 8.9% during the said time frame. The Zacks S&P 500 composite has gained 23.2%.
Industry's Current Valuation
On the basis of trailing 12-month EV/Sales, which is used for valuing capital-intensive stocks like aerospace-defense, the industry is currently trading at 2.91X compared with the S&P 500’s 5.87X and the sector’s 3.28X.
Over the past five years, the industry has traded as high as 3.34X, as low as 1.99X and at the median of 2.73X.
3 Aerospace-Defense Stocks to Buy
GE Aerospace: Headquartered in Evendale, OH, GE Aerospace is a leading designer, developer and producer of jet engines, components and integrated systems for military, commercial and business aircraft. In June 2026, GE Aerospace and Wolfspeed signed a memorandum of understanding to accelerate the adoption of high-voltage silicon carbide technology by developing standardized power modules for aerospace, defense, industrial electrification, and solid-state transformer applications. The collaboration strengthens GE Aerospace's next-generation electrification portfolio by enabling more compact, efficient, and reliable power systems, enhancing its competitive position in advanced aerospace and defense platforms while building a more resilient domestic supply chain for critical semiconductor technologies.
The Zacks Consensus Estimate for GE’s 2026 sales calls for an increase of 15.2% year over year. The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates an improvement of 17.4% year over year. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RTX: Based in Waltham, MA, RTX has emerged as an aerospace and defense company, providing advanced systems and services for commercial, military and government customers worldwide. In July 2026, RTX's Raytheon and NATO launched feasibility studies to expand AMRAAM missile production in Europe by qualifying additional regional suppliers, increasing manufacturing capacity, accelerating deliveries, and strengthening the missile supply chain for U.S. and allied forces. The initiative reinforces the company’s leadership in missile systems, expands its long-term production pipeline through greater NATO demand and improves supply-chain resilience.
The Zacks Consensus Estimate for RTX’s 2026 sales calls for an increase of 6% year over year. The Zacks Consensus Estimate for 2026 EPS indicates a rise of 9.9% year over year. RTX currently has a Zacks Rank #2.
General Dynamics: Headquartered in Falls Church, VA, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. At the end of the first quarter of 2026, General Dynamics witnessed a solid backlog of $130.84 billion, driven by a strong order inflow. The estimated contract value, which combines the total backlog with the potential contract value, totaled $188.44 billion at the end of the first quarter of 2026. The strength of the order flow was driven by strong demand across the company’s product and services portfolio.
The Zacks Consensus Estimate for GD’s 2026 sales calls for a 4.7% improvement year over year. The Zacks Consensus Estimate for 2026 EPS indicates an increase of 7.3% year over year. GD currently has a Zacks Rank #2.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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