Aerospace-Defense Equipment Stocks: M&A Momentum and Strong Buy Candidates in 2026

The aerospace-defense equipment sector is undergoing a transformative phase in 2026, driven by strategic consolidation, robust order backlogs, and a relentless focus on supply chain resilience. As global defense spending accelerates and commercial aviation rebounds, companies like CurtissWright (CW), Astronics (ATRO), and Innovative Solutions and Support (ISSC) are emerging as compelling investment candidates. These firms are leveraging M&A activity, operational discipline, and innovative risk mitigation strategies to navigate a supply-constrained industry while delivering strong returns.

Strategic Consolidation: A Catalyst for Growth

The aerospace-defense sector has seen a surge in M&A activity in 2025, with over 250 transactions in the first half of the year alone. Deals such as Thoma Bravo's $10.6 billion acquisition of Boeing's Digital Aviation Solutions business and Motorola Solutions' $5.0 billion purchase of Silvus Technologies underscore a broader industry shift toward digital integration, autonomous systems, and advanced communication technologies according to industry analysts. This consolidation trend is not only reshaping competitive dynamics but also creating opportunities for smaller, specialized firms to scale through strategic acquisitions.

CurtissWright, for instance, has capitalized on this momentum with a "pivot to growth" strategy that has driven a 12% year-over-year revenue increase in Q2 2025. The company's record backlog of $3.8 billion and a $450 million share repurchase program highlight its confidence in long-term demand. Similarly, Astronics has bolstered its aerospace segment through the $8 million acquisition of Envoy Aerospace, enhancing retrofit capabilities and reducing schedule risks. These moves align with industry-wide efforts to consolidate expertise and secure critical components amid ongoing supply chain disruptions.

Valuation Metrics and Zacks Rankings: A Strong Buy Case

Valuation metrics and analyst ratings further reinforce the investment appeal of these stocks. CurtissWright has been upgraded to a Zacks Rank #2 (Buy) in 2025, with a trailing P/E of 44 and a forward P/E of 37.75. Analysts project a fair value of $608.17, suggesting significant upside potential. Astronics, meanwhile, holds a Zacks Rank #1 (Strong Buy), with 2026 earnings expected to rise 35% year-over-year. The company's 2025 revenue guidance increase to $840–$860 million reflects strong demand for its commercial aircraft retrofit programs.

Innovative Solutions and Support (ISSC) also carries a Zacks Rank #1, supported by a $77.4 million backlog and 2026 sales estimates pointing to robust growth. While specific valuation metrics for ISSC are less transparent, its strategic focus on domestic manufacturing and operational efficiency-such as in-house F-16 platform production-positions it to capitalize on defense spending tailwinds.

Supply Chain Resilience: Mitigating Risks in a Volatile Landscape

Despite these positives, supply chain disruptions remain a critical challenge. According to a Deloitte report, 82% of aerospace-defense firms reported tariff-related impacts in 2025, prompting strategies like dual sourcing, nearshoring, and inventory optimization. Each of these companies has adopted tailored approaches to mitigate risks:

• CurtissWright has diversified its supplier base, securing at least two suppliers for critical components and leveraging a "in the region, for the region" strategy to reduce dependency on distant sources. A partnership with Fastenal has further enhanced its supply chain through real-time data analytics and customized tooling.
• Astronics prioritizes conflict minerals compliance and supplier transparency, requiring annual Conflict Minerals Reporting Templates (CMRTs) and encouraging certification through the EICC/GeSI Conflict Free Smelter program. The company also employs pass-through pricing and free trade zones to manage tariff volatility.
• ISSC has focused on strategic localization and digital infrastructure, such as integrating its Netsuite ERP system to improve operational efficiency. While specific 2025–2026 plans are less detailed, the company's emphasis on in-house manufacturing and capital allocation suggests a proactive stance toward resilience.

Conclusion: Positioning for 2026 and Beyond

The aerospace-defense sector's strategic consolidation and supply chain innovations are creating a fertile ground for outperformance in 2026. CurtissWright, Astronics, and Innovative Solutions and Support stand out as strong buy candidates, combining robust backlogs, favorable analyst ratings, and disciplined risk management. As global defense budgets rise and commercial aviation demand stabilizes, these firms are well-positioned to capitalize on industry tailwinds while navigating the complexities of a supply-constrained environment.

For investors seeking exposure to a sector poised for growth, these stocks offer a compelling blend of strategic agility and financial strength.