Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Axon (NASDAQ:AXON) and its peers.

Emissions and automation are important in aerospace, so companies that boast advances in these areas can take market share. On the defense side, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression toward Taiwan–have highlighted the need for consistent or even elevated defense spending. As for challenges, demand for aerospace and defense products can ebb and flow with economic cycles and national defense budgets, which are unpredictable and particularly painful for companies with high fixed costs.

The 32 aerospace and defense stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was 1.9% below.

After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.

Luckily, aerospace and defense stocks have performed well with share prices up 13.8% on average since the latest earnings results.

Axon (NASDAQ:AXON)

Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.

Axon reported revenues of $504.1 million, up 34.6% year on year. This print exceeded analysts’ expectations by 5.4%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ earnings estimates and full-year revenue guidance exceeding analysts’ expectations.

Interestingly, the stock is up 41% since reporting and currently trades at $416.15.

Read why we think that Axon is one of the best aerospace and defense stocks, our full report is free.

Best Q2: Mercury Systems (NASDAQ:MRCY)

Founded in 1981, Mercury Systems (NASDAQ:MRCY) specializes in providing processing subsystems and components for primarily defense applications.