Our latest momentum screens highlight positive earnings trends for aerospace and defence stocks amid a rapidly changing security landscape and positive news on tariffs.
On our UK large-cap screen, Rolls-Royce (RR.) once again passed all tests. Analysts have raised their forward earnings per share (EPS) growth forecasts from last month as the company, which has seen its shares rise by 90 per cent over the past year, received the good news that it will be able to export its engines across the Atlantic tariff-free. Last week, British Airways owner International Airlines Group (IAG) announced a new order for 21 Airbus (FR:AIR) wide-bodied planes, which will use Rolls-Royce’s engines.
Elsewhere on the London market, Babcock International (BAB) appeared on our UK mid-cap screen. In its latest update, the company said it expects annual operating profit to surge ahead of analyst forecasts against a backdrop of rising European defence spending. Its year-on-year order backlog increased by £600mn. Something to watch out for here is the incoming UK strategic defence review, which has implications for Babcock and other UK defence stocks such as BAE Systems (BA.).