Zacks Industry Outlook Highlights GE Aerospace, Airbus Group and Huntington Ingalls Industries
Chicago, IL – August 1, 2025 – Today, Zacks Equity Research discusses GE Aerospace GE, Airbus Group EADSY and Huntington Ingalls Industries HII.
Industry: Aerospace - Defense
Rising U.S. defense spending is set to benefit aerospace-defense firms focused on military aerospace, although persistent supply-chain issues may still pose challenges. Meanwhile, strong global air passenger growth — up 5% year over year and projected to rise 5.8% in 2025 — offers a solid boost to commercial aerospace players.
Airlines' demand for new jets and fleet upgrades amid record-high aircraft backlogs signals positive momentum for industry players despite elevated costs and procurement delays. The frontrunners in the aerospace-defense industry that you may add to your portfolio are GE Aerospace, Airbus Group and Huntington Ingalls Industries.
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 cyber security 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 Trends Shaping the Future of the Aerospace-Defense Industry
Impressive Air Traffic Outlook Boosts Prospects: Steadily improving global air traffic data in recent times has been boosting the near-term growth prospects of the industry. As per the monthly air passenger market analysis report published by the International Air Transport Association ("IATA") in May 2025, industry-wide revenue per kilometer (RPK) — the metric used to measure air passenger traffic — rose 5% year over year to 806 billion. Looking ahead, IATA projects the number of global air passengers to grow 5.8% in 2025 from the 2024 level (as per IATA's latest outlook published in June 2025). Such impressive projections bode well for commercial aerospace manufacturers that have long borne the brunt of poor air travel in the form of delayed jet deliveries and, in some cases, cancellation of orders by airlines.
Expanding Defense Budget Remains a Growth Catalyst: While the commercial aerospace market has been steadily growing in recent quarters following its recovery from the pandemic-era downturn, the defense segment demonstrated resilience throughout that period, supported by consistent government funding. To this end, it is worth noting that in May 2025, U.S. President Trump proposed a 13% increase in the nation's defense spending to $1.01 trillion for fiscal 2026. Such improved funding provisions set the stage for industry players focused on the defense business to win more contracts and expand their production volume, which is likely to boost their top line.
Supply-Chain Issues Will Continue to Hurt: The Aerospace and Defense industry continues to face headwinds from supply-chain disruptions that began during the pandemic, caused by reduced aircraft demand and global movement restrictions. These challenges have disproportionately affected smaller suppliers, particularly those closely tied to the commercial aerospace and aftermarket services sectors. While the global economy has gradually recovered, supply-chain constraints persist and are likely to hinder industry growth in the near term.
In its June 2025 outlook, the IATA mentioned that the global aircraft backlog has risen to a record high of 17,000 jets owing to a significant lag in aircraft deliveries. This shortfall was largely due to ongoing supply-chain bottlenecks. Additionally, the newly imposed U.S. tariffs on imported goods are expected to significantly intensify the global supply-chain issues, potentially delaying the procurement of critical aerospace components. These factors may elevate production costs and disrupt manufacturing timelines, adding to uncertainty for industry players and constraining growth prospects for the U.S. Aerospace and Defense sector in the short run.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Aerospace-Defense industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #62, which places it in the top 25% of more than 250 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 as well as its own sector over the past year. The stocks in this industry have collectively gained 14.1% compared with the Aerospace sector's growth of 22.6%. The Zacks S&P 500 composite has gone up 17.4% in the said time frame.
Industry's Current Valuation
On the basis of the trailing 12-month EV/Sales ratio, which is used for evaluating capital-intensive stocks like aerospace-defense, the industry is currently trading at 3.17 compared with the S&P 500's 5.51 and the sector's 3.36.
Over the past five years, the industry has traded as high as 3.17X, as low as 1.66X and at the median of 2.30X.
3 Aerospace-Defense Stocks to Add to Your Portfolio
GE Aerospace: Based in Cincinnati, OH, the company is a leading designer, developer and producer of jet engines, components and integrated systems for military, commercial and business aircraft. On July 17, 2025, GE Aerospace announced its second-quarter 2025 results. Its revenues surged 21% year over year to $11 billion, while its earnings per share improved 64.3%.
The Zacks Consensus Estimate for GE Aerospace's third-quarter 2025 sales implies an improvement of 14.9% from the year-ago quarter's reported figure. GE boasts a long-term (three-to-five years) earnings growth rate of 15.8%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Airbus Group: Based in Leiden, the Netherlands, the company manufactures airplanes and military equipment. On July 30, 2025, Airbus announced its consolidated financial results for the first half of 2025. Its consolidated revenues improved 3% year over year, while its earnings per share surged a solid 86%.
The Zacks Consensus Estimate for EADSY's 2025 sales is pegged at $85.75 billion, suggesting a solid improvement of 14.7% from the year-ago reported number. The stock boasts a long-term earnings growth rate of 4.1%. It currently carries a Zacks Rank #2 (Buy).
Huntington Ingalls.: Based in Newport News, VA, the company designs, builds and maintains nuclear-powered ships such as aircraft carriers and submarines, and non-nuclear ships, such as surface combatants, expeditionary warfare/amphibious assault and coastal defense surface ships. It also provides after-market services for military ships around the globe. On July 24, 2025,
Huntington Ingalls announced that its Mission Technologies division has clinched a $74 million task order for providing modeling and simulation capabilities to the U.S. Air Force that will inform technology-fielding decisions for the space community.
HII stock boasts a long-term earnings growth rate of 11.3%. The Zacks Consensus Estimate for 2025 sales indicates a 3.3% improvement from the 2024 reported figure. HII currently carries 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.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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GE Aerospace (GE): Free Stock Analysis Report
Airbus Group (EADSY): Free Stock Analysis Report
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