Defense sector earnings: RTX, Thales and Northrop Grumman

Tuesday’s session will be partly marked by a concentration of earnings releases from most of the largest companies in the defense sector, with reports from U.S. industry leaders dominating. Today, Northrop Grumman, RTX, and France’s Thales will publish their results.

On Thursday, the earnings season will be complemented by Safran, SAAB, Dassault, and Lockheed Martin.

Thales (HO.FR)

The French industry heavyweight reported mixed first-quarter results, causing the company’s share price to fall by more than 4%.

Orders:

• Overall, orders increased by 23%, with organic growth of 27%. Growth was concentrated mainly in developed markets: 31% versus 10% in emerging markets.
• All of the increase in orders came from the “defense” segment, which grew by 71%. The “cyber” and “aerospace” segments recorded slight declines.
• Sales rose to EUR 5.31bn, up 7.2%.

Management reaffirmed its targets:

• Book-to-bill ratio above 1,
• Organic sales growth of 6–7%,
• EBITDA margin of at least 12.6%.

Valuation support may come from large contracts for orbital equipment as well as air and missile defense systems—equipment categories Europe may urgently need amid growing uncertainty over U.S. commitments to NATO.

RTX (RTX.US)

RTX Corp. reported Q1 2026 results that the market viewed as merely decent.

• Sales rose to USD 22.1bn (+9% YoY).
• Order backlog increased to USD 271bn (+25%).
• Adjusted EPS rose by 21% to USD 1.78, versus expectations of around USD 1.5.

Breaking the company down by segment:

• Sales and profitability growth were very similar across business units. Raytheon, Pratt & Whitney, and Collins Aerospace delivered 10% organic sales growth, and adjusted profit growth exceeded 20%
• Except at Collins, where profitability increased by only 6%. The company attributes this to a high exposure to the civilian segment and pricing pressure resulting from tariffs.

Management raised its FY2026 sales guidance to USD 92.5–93.5bn, with expected adjusted EPS of USD 6.7–6.9 and FCF of USD 8.25–8.75bn.

The company appears to be benefiting from several structural trends in the military equipment market and is well positioned to capitalize on them. This creates meaningful upside potential, and under current conditions the annual targets seem moderate and achievable.

Northrop Grumman (NOC.US)

The company reported mixed results, but overall investor sentiment following the release is moderately negative. The stock is down about 2% in after-hours trading.
Sales came in weak:

• Overall growth was only 4%, to USD 9.8bn.
• Despite this, the company maintained its full-year sales guidance of at least USD 43.5bn.
• Profitability was much better: the average margin increased from 6% to 10.8%.

Beyond financial guidance, Management points to:

• Aligning the company’s portfolio with new U.S. Department of Defense plans,
• Accelerating B-21 aircraft production
• Speeding up the ramp-up of the Sentinel program.

Notable items in the report include large “inter-segment eliminations,” which rose significantly, and USD 280m of expenditures (not costs) in the “Other” line. The former can be explained by the aforementioned portfolio adjustment, although the magnitude of the change may raise concerns. The latter figure remains unclear and could be linked to revaluations, contractual penalties, classified projects, or employee benefits.

Ultimately, during the conference call, Northrop appears to be asking investors for the benefit of the doubt—who, judging by the market reaction, seem willing to grant it only to a limited extent.