Karman's 29% Rise Makes it a Defense Stock Winner After Post-Election Slump

Dow Jones
18小时前

Defense stocks were showing signs of life Friday, stabilizing after the sector's precipitous slide the previous session.

One standout Friday was a lesser known name: Shares of Karman, which makes parts for missiles and drones, surged 29% after its earnings solidly beat expectations.

Karman on Thursday night reported revenue of $201.6 million and earnings per share of 19 cents for the September quarter. That's compared with estimates of $194.8 million and 15 cents a share, respectively, from analysts polled by FactSet.

While the beat is undeniable, the market's outsize reaction is likely a combination of buying a beaten-down stock -- Karman had fallen 56% this year through Thursday's close -- and the broader rebound in the sector.

After the Democrats won control of Congress in Tuesday's midterm elections, concerns mounted about possible future cuts to military spending. That resulted in a slide in defense and aerospace stocks on Wednesday and Thursday. Friday trading, however, was less painful: The iShares U.S. Aerospace & Defense ETF rose slightly, and the stock prices of major defense players like General Dynamics, L3Harris, Northrop Grumman, and RTX had either posted slight declines or modest gains by midday.

Karman's outlook is likely helping, too.

For the full-year, the company expects revenue of $755 million to $760 million, above estimates of $752.7 million.

A $218 million deal with Lockheed Martin, announced last month, has helped increase revenue and raise its backlog of contracted orders to $1.7 billion -- twice what it was at the end of 2025. The company is providing "shrouds," or shields, that protect sensors on missile interceptors from extreme heat so they can more precisely strike their intended target.

"Earnings demonstrated strength in backlog growth, reaccelerating organic growth & cash profitability," Piper Sandler analyst Clarke Jeffries told Barron's. He called the backlog growth "a strong data point to break the downward pressure."

Other drone stocks were on the rise Friday, including AeroVironment and Kratos, which were up 9% and 2%, respectively.

 

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