Defense Contractors Q1 Revenues Top Estimates, But Guidance Weighs on Shares

Defense contractors posted a strong first quarter, with revenues exceeding analysts’ consensus by 3.4% on average, but next-quarter revenue guidance came in 1.7% below expectations. The mixed outlook kept share price gains subdued, with a group average increase of 1.1% since the reports, according to data released June 1, 2026. General Dynamics (NYSE:GD) led with revenue of $13.48 billion, up 10.3% year-over-year and 5.9% above estimates, driven by its combat and marine systems. CEO Phebe Novakovic pointed to "strong operating results and excellent cash conversion." Mercury Systems (NASDAQ:MRCY) delivered the biggest beat, with revenue up 11.5% to $235.8 million, propelling its stock 36% higher. Lockheed Martin (NYSE:LMT) disappointed, reporting flat revenue of $18.02 billion that missed estimates, and shares fell 4.4%. Leonardo DRS (NASDAQ:DRS) and Kratos (NASDAQ:KTOS) also topped revenue projections. Heightened geopolitical tensions — including U.S. conflict with Iran and ongoing Russia-Ukraine and China-Taiwan risks — have underscored defense spending needs, though future budgets remain sensitive to political shifts.