3 Defence Technology Stocks With Earnings Growth And Valuation Risk

Defence technology stocks sit at the crossroads of venture capital, government budgets, and geopolitics, and right now that mix is especially intense. A reported $12.3b of VC money flowing into defence tech start ups in 2026 so far, alongside active conflicts and rising defence spending, is pushing fresh attention onto companies linked to drones, AI and autonomous systems. For investors, that can mean potential opportunity, but also the risk that some valuations may be running hot. This article breaks down 3 stocks from our Defence Technology Stocks screener that appear positively exposed to these news driven trends.

Overview: HawkEye 360 is a US based space enabled defense technology company that operates its own constellation of satellites to collect and analyze radio frequency signals, turning this data into shareable intelligence for defense, intelligence, and national security agencies in the United States and allied countries.

Operations: HawkEye 360 generates about US$117.7m in revenue from Aerospace & Defense, with around US$71.6m from the United States and US$46.0m from international customers.

Market Cap: US$2.1b

HawkEye 360 sits at the center of the current defence tech boom, supplying RF based intelligence that helps militaries track drones, jammers, radars, and covert communications. This is the kind of capability that governments are funding heavily as conflicts increase demand for next generation sensing and battlefield awareness. Analysts note expectations for growth in both earnings and revenue and see meaningful upside from current prices, while recent contract wins above US$100m indicate growing global interest in its services. At the same time, the stock carries clear risks, including a high P/S multiple, modest forecast ROE, and financials that are still influenced by one off items. Investors therefore need to weigh growing demand against execution, valuation, and balance sheet uncertainties.

HawkEye 360’s contracts and premium P/S suggest investors may be pricing in a much bigger future, but the real story sits in the expectations baked into analyst forecasts and what could upset them, starting with the analyst forecasts for HawkEye 360

Overview: Aerojet Rocketdyne Holdings is a US based aerospace and defense company that designs and manufactures rocket propulsion systems, hypersonic engines, electric propulsion for satellites, and armament systems that power missiles, space launches, and national security programs.

Market Cap: US$4.7b

Aerojet Rocketdyne sits in the slipstream of the current defence tech boom as a key supplier of rocket and missile propulsion for programs that benefit from higher defence budgets and renewed focus on deterrence. Investors are weighing an earnings outlook that analysts expect to improve, including forecast earnings growth of 33.07% per year and a higher future ROE, against weaker current margins, a high P/E multiple, and funding that leans heavily on external borrowing. The recent US$1b convertible preferred issue and very large cited post money valuation also raise questions about how much optimism is already reflected. For anyone tracking defence technology stocks, the key consideration is how these potential positives and pressure points compare once the details are examined more closely.

Accelerating demand for missile and space propulsion puts Aerojet Rocketdyne at the heart of higher defence budgets, but a rich P/E and heavy borrowing raise tough questions that only the 2 key rewards and 2 important warning signs (1 is major!)

Overview: MDA Space is a Canada based space technology company that builds satellites, robotics such as Canadarm3, and Earth observation systems, supplying governments, defense agencies, and commercial customers with communications, surveillance, and data services in orbit and on the ground.

Operations: MDA Space generates about CA$1.75b in revenue from its combined Geointelligence, Robotics & Space Operations and Satellite System segment, with most sales coming from Canada and the United States.

Market Cap: CA$7.7b

MDA Space offers exposure to both the defence technology sector and the space economy, with large LEO constellation contracts, the Montreal high volume satellite plant and programs like Canadarm3 and CHORUS aimed at long term government and military demand. The planned Blue Canyon Technologies acquisition and recent defense work, including NORAD related projects and U.S. Space Systems Command antennas, increase its presence in U.S. defence and spacecraft manufacturing. However, a high P/E, lower current margins, substantial capital spending and insider selling highlight execution and valuation risk if contract flow or utilization falls short of expectations. The balance between an expanding pipeline and these pressure points is where the main opportunity and risk in MDA Space currently sits.

Accelerating defence and space contracts put MDA Space in the spotlight, but its high P/E and heavy investment spending leave key questions unanswered, and the real tension shows up inside the 2 key rewards and 1 important warning sign

The three defence technology stocks highlighted here are only a starting point, with the full Defence Technology Stocks screener surfacing 44 more companies that each carry their own mix of drones, AI, robotics and surveillance narratives. Use Simply Wall St to identify and analyze the specific catalysts that matter to you so you can focus on the defence technology stories that best match your own highest conviction ideas.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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