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3 Aerospace-Defense Equipment Stocks to Buy on M&A Momentum
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The Zacks Aerospace-Defense Equipment stocks are poised to gain from strategic mergers and acquisitions that improve operational scale, diversify product offerings and increase market presence. However, ongoing supply-chain issues still limit the availability of parts and aircraft deliveries, which might put pressure on production and reduce profitability. Despite this headwind, strong global air passenger traffic trends signal solid growth potential for the stocks in this industry. Some key players from this industry that investors may add to their portfolio are CurtissWright (CW - Free Report) , Astronics (ATRO - Free Report) and Innovative Solutions and Support (ISSC - Free Report) .
About the Industry
The Zacks Aerospace-Defense Equipment industry comprises firms that manufacture various vital components for the aerospace-defense space, ranging from aerostructures, space shuttles, propulsion systems, aircraft engines, defense electronics, missile and radar systems, to flight test equipment, structural adhesives, instrumentation and control systems, communication products and many more. Some of these companies also offer integrated simulation and training services to the U.S. defense force. While most revenues are generated from the production of the aforementioned accompaniments, industry players also generate revenues by providing notable aftermarket support and services like maintenance, repair and overhaul activities to aerospace and defense players.
3 Trends Shaping the Future of the Aerospace-Defense Equipment Industry
New Mergers and Acquisitions (M&As) Instill Hope: Large companies have traditionally used M&As as a successful strategy to broaden their product offerings. By acquiring other businesses, they can quickly expand their capabilities and stay competitive. In line with this strategy, AAR acquired HAECO Americas from HAECO Group for $78 million in November 2025. The acquisition helps AAR increase the scale and geographic reach of its maintenance operations, allowing it to service more aircraft and customers. At the same time, it speeds up AAR’s long-term strategy to strengthen and grow its Repair & Engineering segment. In October 2025, TransDigm Group completed the acquisition of the Simmonds Precision Products, Inc. Business from RTX for nearly $765 million. The acquisition will strengthen TransDigm’s presence in the aerospace and defense markets by expanding its product offerings, customer base, and exposure to military and commercial aircraft programs. Participants in such consolidations gain access to a broader range of business models, while improved economies of scale across the sector should support market expansion and revenue growth.
Air Traffic View Boosts Opportunities: According to the report by the International Air Transport Association (“IATA”) published in December 2025, global air passenger traffic (measured in revenue passenger kilometers), as of the period ending October 2025, increased 5.3% year over year. The full-year forecast for passenger traffic has been revised downward slightly to 5.2% year over year compared to the 5.8% projected in IATA’s June global outlook report. However, it remains broadly consistent with the long-term historical average of 5%. As passenger traffic increases, airlines fly their existing fleets more frequently. This higher utilization accelerates wear and tear on aircraft, engines and components, boosting demand for replacement parts, avionics, landing systems and other equipment.
Supply-Chain Disruption Poses Risks: Ongoing supply-chain challenges continue to disrupt global trade and business operations. Airlines are particularly hurt by supply-chain disruptions, including unexpected aircraft and engine maintenance issues and delays in parts and new aircraft deliveries. According to IATA, these supply-chain constraints will hinder airlines from reaching their full growth potential and slow progress toward reducing CO2 emissions. IATA’s December 2025 outlook highlights that limited aircraft availability and labor shortages remain key supply-side constraints for the airline industry. Delivery shortfalls of more than 5,000 aircraft indicate that manufacturers have been unable to meet airlines’ planned delivery schedules, largely due to production constraints and supply-chain disruptions. Although aircraft output is gradually recovering, it remains well below historical production levels, even as global air travel demand continues to rise. This mismatch has led to an unprecedented order backlog exceeding 17,000 aircraft, which represents nearly 60% of the world’s active fleet. Such a large backlog implies extended waiting periods for airlines, constrains fleet expansion and replacement plans, and is likely to keep capacity tight and aircraft utilization high for several years.
Zacks Industry Rank Reflects Bright Outlook
The Zacks Aerospace-Defense Equipment industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #96, which places it in the top 40% of more than 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates robust 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 equipment 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 Beats S&P 500, Lags Sector
The Aerospace-Defense Equipment industry has outperformed the Zacks S&P 500 composite but it has lagged the sector in the past year. The stocks in this industry have collectively surged 30.6% in the past year, while the Aerospace sector has soared 32.9%. The Zacks S&P 500 composite has gained 19% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of trailing 12-month EV/Sales, which is used for valuing capital-intensive stocks like aerospace-defense equipment, the industry is currently trading at 12.51X compared with the S&P 500’s 5.74X and the sector’s 3.53X.
Over the past five years, the industry has traded as high as 12.96X, as low as 5.42X and at the median of 8.19X.
EV-Sales Ratio TTM
3 Aerospace-Defense Equipment Stocks to Buy
Astronics: Based in East Aurora, NY, the company is a manufacturer of specialized lighting and electronics for the cockpit, cabin and exteriors of military, commercial transport and private business jet aircraft. The company reported modest overall growth in the third quarter, with total sales rising 3.8% to $211.4 million. This increase was mainly driven by strong performance in its Aerospace segment, where sales grew 8.5% to $192.7 million. For the period ended on Sept. 27, 2025, the company received $863 million worth of bookings. As a result, the company ended the quarter with a solid backlog of $646.7 million.
The Zacks Consensus Estimate for ATRO’s 2026 sales indicates a 14.5% improvement year over year. The estimate for 2026 earnings implies 35% growth year over year. ATRO currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: ATRO
Innovative Solutions and Support: Based in Exton, PA, the company designs, manufactures and sells flight avionics products (electronic instruments used in the operation of aircraft) to the military and government, commercial air transport and corporate aviation markets primarily to upgrade, or retrofit, aircraft currently in use. On Dec. 18, 2025, the company reported its fiscal fourth-quarter results. Fiscal full-year 2025 sales totaled $84.3 million, up 78.6%. As of Sept. 30, 2025, its backlog was $77.4 million. It expects to recognize nearly 44% of backlog over the next 12 months and nearly 92% over the next 24 months as revenues, with the remainder recognized thereafter.
The Zacks Consensus Estimate for ISSC’s fiscal 2026 sales indicates a 5.8% improvement year over year. The estimate for fiscal 2026 earnings has improved 6.7% in the past 30 days. ISSC currently carries a Zacks Rank #1.
Price & Consensus: ISSC
CurtissWright: This North Carolina-based company 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. In November 2025, the company had authorized an additional $416 million for future share repurchases, increasing the total available authorization to $550 million. This share repurchase program highlights the company’s financial strength.
The Zacks Consensus Estimate for CW’s 2026 sales indicates a 6.9% improvement year over year. The consensus estimate for 2026 earnings implies 11.6% growth year over year. CW currently carries a Zacks Rank #2 (Buy).
Price & Consensus: CW
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3 Aerospace-Defense Equipment Stocks to Buy on M&A Momentum
The Zacks Aerospace-Defense Equipment stocks are poised to gain from strategic mergers and acquisitions that improve operational scale, diversify product offerings and increase market presence. However, ongoing supply-chain issues still limit the availability of parts and aircraft deliveries, which might put pressure on production and reduce profitability. Despite this headwind, strong global air passenger traffic trends signal solid growth potential for the stocks in this industry. Some key players from this industry that investors may add to their portfolio are CurtissWright (CW - Free Report) , Astronics (ATRO - Free Report) and Innovative Solutions and Support (ISSC - Free Report) .
About the Industry
The Zacks Aerospace-Defense Equipment industry comprises firms that manufacture various vital components for the aerospace-defense space, ranging from aerostructures, space shuttles, propulsion systems, aircraft engines, defense electronics, missile and radar systems, to flight test equipment, structural adhesives, instrumentation and control systems, communication products and many more. Some of these companies also offer integrated simulation and training services to the U.S. defense force. While most revenues are generated from the production of the aforementioned accompaniments, industry players also generate revenues by providing notable aftermarket support and services like maintenance, repair and overhaul activities to aerospace and defense players.
3 Trends Shaping the Future of the Aerospace-Defense Equipment Industry
New Mergers and Acquisitions (M&As) Instill Hope: Large companies have traditionally used M&As as a successful strategy to broaden their product offerings. By acquiring other businesses, they can quickly expand their capabilities and stay competitive. In line with this strategy, AAR acquired HAECO Americas from HAECO Group for $78 million in November 2025. The acquisition helps AAR increase the scale and geographic reach of its maintenance operations, allowing it to service more aircraft and customers. At the same time, it speeds up AAR’s long-term strategy to strengthen and grow its Repair & Engineering segment. In October 2025, TransDigm Group completed the acquisition of the Simmonds Precision Products, Inc. Business from RTX for nearly $765 million. The acquisition will strengthen TransDigm’s presence in the aerospace and defense markets by expanding its product offerings, customer base, and exposure to military and commercial aircraft programs. Participants in such consolidations gain access to a broader range of business models, while improved economies of scale across the sector should support market expansion and revenue growth.
Air Traffic View Boosts Opportunities: According to the report by the International Air Transport Association (“IATA”) published in December 2025, global air passenger traffic (measured in revenue passenger kilometers), as of the period ending October 2025, increased 5.3% year over year. The full-year forecast for passenger traffic has been revised downward slightly to 5.2% year over year compared to the 5.8% projected in IATA’s June global outlook report. However, it remains broadly consistent with the long-term historical average of 5%. As passenger traffic increases, airlines fly their existing fleets more frequently. This higher utilization accelerates wear and tear on aircraft, engines and components, boosting demand for replacement parts, avionics, landing systems and other equipment.
Supply-Chain Disruption Poses Risks: Ongoing supply-chain challenges continue to disrupt global trade and business operations. Airlines are particularly hurt by supply-chain disruptions, including unexpected aircraft and engine maintenance issues and delays in parts and new aircraft deliveries. According to IATA, these supply-chain constraints will hinder airlines from reaching their full growth potential and slow progress toward reducing CO2 emissions. IATA’s December 2025 outlook highlights that limited aircraft availability and labor shortages remain key supply-side constraints for the airline industry. Delivery shortfalls of more than 5,000 aircraft indicate that manufacturers have been unable to meet airlines’ planned delivery schedules, largely due to production constraints and supply-chain disruptions. Although aircraft output is gradually recovering, it remains well below historical production levels, even as global air travel demand continues to rise. This mismatch has led to an unprecedented order backlog exceeding 17,000 aircraft, which represents nearly 60% of the world’s active fleet. Such a large backlog implies extended waiting periods for airlines, constrains fleet expansion and replacement plans, and is likely to keep capacity tight and aircraft utilization high for several years.
Zacks Industry Rank Reflects Bright Outlook
The Zacks Aerospace-Defense Equipment industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #96, which places it in the top 40% of more than 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates robust 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 equipment 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 Beats S&P 500, Lags Sector
The Aerospace-Defense Equipment industry has outperformed the Zacks S&P 500 composite but it has lagged the sector in the past year. The stocks in this industry have collectively surged 30.6% in the past year, while the Aerospace sector has soared 32.9%. The Zacks S&P 500 composite has gained 19% in the same time frame.
One-Year Price Performance
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Industry's Current Valuation
On the basis of trailing 12-month EV/Sales, which is used for valuing capital-intensive stocks like aerospace-defense equipment, the industry is currently trading at 12.51X compared with the S&P 500’s 5.74X and the sector’s 3.53X.
Over the past five years, the industry has traded as high as 12.96X, as low as 5.42X and at the median of 8.19X.
EV-Sales Ratio TTM
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3 Aerospace-Defense Equipment Stocks to Buy
Astronics: Based in East Aurora, NY, the company is a manufacturer of specialized lighting and electronics for the cockpit, cabin and exteriors of military, commercial transport and private business jet aircraft. The company reported modest overall growth in the third quarter, with total sales rising 3.8% to $211.4 million. This increase was mainly driven by strong performance in its Aerospace segment, where sales grew 8.5% to $192.7 million. For the period ended on Sept. 27, 2025, the company received $863 million worth of bookings. As a result, the company ended the quarter with a solid backlog of $646.7 million.
The Zacks Consensus Estimate for ATRO’s 2026 sales indicates a 14.5% improvement year over year. The estimate for 2026 earnings implies 35% growth year over year. ATRO currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: ATRO
Innovative Solutions and Support: Based in Exton, PA, the company designs, manufactures and sells flight avionics products (electronic instruments used in the operation of aircraft) to the military and government, commercial air transport and corporate aviation markets primarily to upgrade, or retrofit, aircraft currently in use. On Dec. 18, 2025, the company reported its fiscal fourth-quarter results. Fiscal full-year 2025 sales totaled $84.3 million, up 78.6%. As of Sept. 30, 2025, its backlog was $77.4 million. It expects to recognize nearly 44% of backlog over the next 12 months and nearly 92% over the next 24 months as revenues, with the remainder recognized thereafter.
The Zacks Consensus Estimate for ISSC’s fiscal 2026 sales indicates a 5.8% improvement year over year. The estimate for fiscal 2026 earnings has improved 6.7% in the past 30 days. ISSC currently carries a Zacks Rank #1.
Price & Consensus: ISSC
CurtissWright: This North Carolina-based company 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. In November 2025, the company had authorized an additional $416 million for future share repurchases, increasing the total available authorization to $550 million. This share repurchase program highlights the company’s financial strength.
The Zacks Consensus Estimate for CW’s 2026 sales indicates a 6.9% improvement year over year. The consensus estimate for 2026 earnings implies 11.6% growth year over year. CW currently carries a Zacks Rank #2 (Buy).
Price & Consensus: CW