Defense Spending Boom: Who's Cashing In?

With the U.S. Defense Appropriations Act allocating $831.5 billion for fiscal 2026, aerospace contractors are having a field day. Howmet Aerospace (HWM) is a prime example—its defense aerospace segment jumped 24% YoY in Q3 2025, now representing 17% of total revenue. The fuel? Soaring demand for F-35 engine spares and legacy fighter parts (F-15, F-16).

HWM’s Engineered Structures segment reflects this tailwind with 14% revenue growth. But here’s the catch: the stock is trading at 46X forward P/E versus the industry average of 28.6X. That’s a significant premium, and the Zacks consensus just nudged earnings estimates up 2.8%—modest compared to the valuation.

Competitors aren’t sleeping either. GE Aerospace just landed a $5 billion Air Force contract for F110 engines, with defense revenues up 11% YoY. Textron’s Bell segment is also in on the action with new helicopter deals.

The real question: Is the defense boom already priced in at these valuations, or is this a multi-year tailwind? Current momentum suggests upside, but investors should watch whether new contract wins can justify the premium multiples. HWM carries a Zacks Rank #3 (Hold)—solid but not a screaming buy.