The four major U.S. defense primes finished reporting Q1 2026 results last week. The print across RTX, Lockheed Martin, Northrop Grumman, and General Dynamics tells a more layered story than the stock charts suggest. RTX and Northrop beat both lines and raised full year guidance. Lockheed missed and traded down 6 percent. General Dynamics came in roughly in line. The market reaction has been concentrated around the misses rather than the underlying order book, which is approaching record territory across all four. The split is worth understanding because the next two quarters look very different.
RTX delivered the cleanest quarter of the four. Revenue rose about 9 percent on continued strength in Pratt and Whitney and Raytheon, and adjusted earnings per share grew 21 percent on better operating margins and program execution. The company raised the bottom end of its full year guidance and reaffirmed the high end. The Pratt commercial aerospace mix continues to be a tailwind that the rest of the defense primes do not have. The Raytheon side of the business reported its strongest order intake in two years on Patriot, NASAMS, and missile resupply contracts tied to Ukraine and Middle East demand. The book-to-bill ratio for the segment ran at 1.5 in the quarter.
Northrop Grumman was the second clear winner. Net income was up 82 percent year over year as the company recovered from B-21 program losses that depressed Q1 2025. The B-21 program is now in low-rate initial production and is expected to ramp meaningfully through 2026 and into 2027. Northrop is well positioned for several large government awards expected this year, including the F/A-XX next-generation Navy fighter, the Sentinel ICBM modernization continuation decision, and parts of the Golden Dome missile defense architecture. The company's initial 4.5 percent revenue growth guidance for 2026 is widely viewed as a floor, with most sell-side coverage now modeling closer to 6 to 7 percent.
Lockheed Martin was the print that disappointed. Revenue was roughly flat year over year and the operating margin compressed in the Aeronautics and Rotary and Mission Systems segments. The F-35 program continues to face execution issues with the Tech Refresh 3 software upgrade, and the Sikorsky helicopter business is in the middle of a production transition. The stock fell about 6.3 percent on the day of the announcement and has not fully recovered. The backlog still sits at $186 billion, the largest in the company's history, and the management team reaffirmed the full year outlook. The market is reading the print as a one or two quarter execution issue rather than a structural problem.
General Dynamics came in close to consensus on both revenue and earnings. The combat systems business performed quite well on M1 Abrams tank production and ammunition demand. The Gulfstream business jet segment was softer on order timing but the backlog remains strong. The Marine Systems segment continues to ramp on the Columbia class submarine program. General Dynamics is the most defensively positioned of the four from a free cash flow standpoint and has the cleanest balance sheet. That has translated into more aggressive share repurchases.
The shared backdrop for all four is the FY27 defense budget request, which moved through the House Armed Services Committee on April 27 and is now headed to floor action. The request comes in at roughly $1.5 trillion total, with the Pentagon base topline at about $1.05 trillion and overseas funding rounding out the total. The procurement and research, development, test, and evaluation lines combined are up about 9 percent year over year. That is the structural support behind the order book numbers each prime is reporting in its quarterly disclosures.
The geopolitical backdrop is the wild card. The Iran posture remains in active negotiation, with the War Powers Resolution clock running through June. The Ukraine support package is in active discussion in both chambers of Congress. The Israel and Lebanon situations remain volatile. Taiwan and broader Indo-Pacific deterrence spending is the long thesis behind several program lines for both Lockheed and Northrop. None of this is in the prime's published guidance because it cannot be modeled with any precision. It is also why the defense ETFs have outperformed the broader market year to date.
The takeaway for portfolio construction is straightforward. The two prints worth owning on Q1 are RTX and Northrop. Lockheed is a value setup at current levels if the F-35 issues clear in the back half, but the entry price matters more than usual. General Dynamics is the steady compounder. ITA and PPA are the cleanest broad exposure. The reports do not change the long thesis but create a cleaner read on which prime is best for the next eighteen months. Watch for the FY27 budget conference report in mid-summer to confirm the procurement growth numbers and the program-by-program breakouts.