Mixed Aerospace Earnings: GE Outshines Peers as Tariff, Backlog Trends Define Outlook for Defense Stocks

The aerospace and defense sector delivered a mixed set of first-quarter results, with GE Aerospace emerging as the clear standout among the four of the five largest ITA ETF holdings that reported—GE, Lockheed Martin (LMT), RTX, and Northrop Grumman (NOC). These four names collectively comprise 43% of the ETF, making their performance a meaningful barometer for the group. Boeing (BA), the fifth pillar of the ETF, reports tomorrow, and the industry will be watching closely to see if it can offer any stabilization following a bruising few days for the sector. The big themes from this quarter: tariff headwinds are now fully embedded in forward guidance, defense backlogs remain robust, and commercial aerospace demand appears largely resilient despite some geopolitical volatility.

GE Aerospace Sets the Pace

GE Aerospace posted an adjusted EPS of $1.49, well ahead of the $1.27 consensus, on $9 billion in revenue. Despite acknowledging a $500 million tariff headwind, management reaffirmed its full-year profit and revenue guidance. What set GE apart was not just the headline beat, but the tone and clarity on navigating tariffs. CEO Larry Culp disclosed proactive talks with the Trump administration, efforts to mitigate costs, and no notable softening in order activity. Orders rose 12% to $12.3 billion. Notably, GE has yet to see any airline deferrals, and management expressed confidence that any pulled orders would be quickly reabsorbed into the queue. The company’s defense and propulsion segment was slightly below expectations, but strong commercial services offset that. Shares are up 4% post-earnings and now trade above the 200-day moving average at $182, suggesting investor confidence in the outlook.

Lockheed Martin: Solid Numbers, But a Tepid Tape

LMT delivered a beat across the board, with Q1 EPS of $7.28 (vs. $6.34 est) and revenue of $17.96 billion (+4.5% y/y). Backlog surged to nearly $173 billion, up 8.5%, led by continued strength in the F-35 program and robust order flow in missile systems. Operating income rose 17% y/y, and all segments except Space posted notable improvements. Despite strong numbers, the stock initially rallied but faded to flat by midday. Importantly, management reiterated FY guidance and noted its outlook does not yet incorporate the evolving impact of tariffs or new executive orders from the administration. This led to the reversal as analyst questioned its accuracy. The decision not to protest the NGAD (Next Gen Air Dominance) award to Boeing may also indicate internal recalibration of priorities.

RTX Posts In-Line Results, but Tariff Questions Linger

RTX posted adjusted EPS of $1.47 vs. $1.38 expected on revenue of $20.31 billion. Sales came in solid for Collins Aerospace and Pratt & Whitney, but Raytheon missed estimates. Despite reaffirming guidance, shares dropped 10% post-report as investors digested commentary around an $850 million potential tariff impact—one that is not yet included in guidance. Free cash flow was stronger than feared at $792 million. Management struck an upbeat tone on European defense demand, but investors clearly wanted greater clarity around tariff mitigation efforts. The decline likely reflects a combination of high expectations and macro sensitivity after recent outperformance.

Northrop Grumman: The Clear Laggard

NOC delivered a disappointing quarter, missing both on earnings and revenue. Adjusted EPS came in at $6.06 (vs. $6.24 est), and revenue fell 6.6% y/y to $9.5 billion. Guidance was cut sharply, with FY EPS now expected to be $24.95-$25.35, down from $27.85-$28.25. The culprit: a $477 million loss provision related to the B-21 Raider stealth bomber due to manufacturing issues. Margins across segments declined, and operating income forecasts were lowered accordingly. Despite record backlog of nearly $93 billion, the stock fell 15% and is now trading near 52-week lows. Investor sentiment has shifted from structural optimism to near-term skepticism.

Tariffs Now Fully in Focus

One of the most important themes this quarter was the growing financial impact of tariffs on the industry. GE, RTX, and LMT all provided commentary, but only GE explicitly baked the expected cost into its full-year guidance. RTX flagged potential exposure up to $850 million, but did not quantify mitigation strategies. LMT stated its guidance does not yet reflect any tariff-related costs. For investors, the contrast in messaging may explain some of the variance in post-earnings stock performance.

GE’s proactive stance, visibility into offsetting actions, and confident messaging gave it the edge. Meanwhile, the murkiness around RTX’s exposure and NOC’s operational issues created drag. LMT’s strong execution was met with a "wait-and-see" attitude, likely because tariff impacts and political risks haven’t been fully accounted for in its numbers.

Backlog and Demand Signal Resilience

Across all four companies, backlogs remain historically high. GE’s 12% order growth, LMT’s nearly $173 billion backlog, and NOC’s $93 billion record reinforce that demand for defense and aerospace remains intact. The concern is less about top-line growth and more about cost pressures, execution risks, and margin stability. Tariffs are the wildcard in that calculus.

What It Means for Boeing (BA)

Boeing’s Q1 report tomorrow will close the loop on the group. With RTX, GE, and LMT all reaffirming guidance despite tariff issues, the spotlight will be on whether Boeing can show similar resilience. Investors will be particularly tuned into commentary on the 737 MAX production cadence, China exposure, and any fallout from the recent delays or delivery rejections. GE’s reassurance that any dropped orders would be quickly absorbed is a positive signal, but BA’s own backlog and operational performance will be the true test.

Conclusion

The aerospace and defense sector is holding up well from a demand standpoint, but the separation in stock performance this quarter is coming down to clarity on tariffs and execution confidence. GE outperformed not because it had the highest growth, but because it addressed investor concerns directly and proactively. For ETF watchers and sector allocators, this earnings cycle reveals growing dispersion and the need to focus on operational agility in a trade-disrupted world. Boeing now has the opportunity to either validate GE’s bullish tone—or reinforce the skepticism seen in RTX and NOC.