BA vs. GD: Which Defense Contractor Has Stronger Growth Prospects?

Boeing BA and General Dynamics GD are well positioned to benefit from heightened global geopolitical tensions, which are driving governments to strengthen their defense capabilities and increase military spending. Rising conflicts, strategic competition among major powers, and growing national-security concerns are prompting countries to reassess military readiness and accelerate modernization programs.

This creates a favorable long-term demand backdrop for both companies. As governments commit to multi-year defense programs, Boeing and General Dynamics can benefit from larger contract opportunities, stronger backlogs and greater revenue visibility. Continued military modernization and the need to replace aging equipment further reinforce the industry's long-term growth prospects, making geopolitical instability an important structural tailwind for these defense contractors.

Let's compare the two stocks' fundamentals to determine which one is a better investment option at present.

Factors Acting in Favor of BA Stock

Boeing continues to witnesses a solid inflow of contracts. In the second quarter of 2026, Boeing Defense, Space & Security (“BDS”) revenues increased 13% year over year to $7.48 billion, driven by higher volume, including classified programs, missiles and weapons, and KC-46A activity. The segment booked $7 billion of orders and ended the quarter with an $85 billion backlog, with 27% tied to customers outside the United States. Management also noted increased demand in missiles and munitions and secure communications satellites. The company is working to improve contract underwriting and remains selective on new bids, which should help reduce the risk of repeating losses on legacy fixed-price development programs.

The U.S. Navy MQ-25A Stingray completed its first flight and received Milestone C, clearing the program for low-rate initial production. The U.S. Air Force T-7A Red Hawk also achieved Milestone C and began low-rate initial production. These milestones shift key programs from development toward production and fleet support, which can broaden future revenue opportunities.

Factors Acting in Favor of GD Stock

General Dynamics ended second-quarter 2026 with nearly $20 billion in orders, resulting in a healthy 1.4-to-1 book-to-bill ratio. Its estimated contract value reached $186.9 billion, highlighting strong revenue visibility. Management also raised its 2026 outlook to approximately $55.7 billion revenues. Major recent awards, including contracts for armored vehicles, Abrams engineering and munitions, further demonstrate strong demand and support General Dynamics’ long-term growth prospects.

In the second quarter of 2026, management noted that U.S. defense spending remained at heightened levels and the administration continued to support further increases. Marine Systems ended the quarter with a backlog of $65.2 billion, up 23% year over year. Management now expects 2026 Marine Systems revenues of approximately $18 billion and an operating margin of 7.4%.

How Do Zacks Estimates Compare for BA & GD?

The Zacks Consensus Estimate for Boeing’s 2026 and 2027 earnings per share (EPS) indicates an increase of 91.82% and 552.32%, respectively, year over year. 
 

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The Zacks Consensus Estimate for General Dynamics’ 2026 and 2027 EPS indicates an increase of 9.18% and 9.92%, respectively, year over year. GD’s long-term (three to five years) earnings growth rate is 10.2%.

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Valuation for BA & GD

BA shares trade at a forward 12-month Price/Sales (P/S F12M) of 1.55X compared with GD’s 1.79X.

Debt Position of BA & GD

Currently, Boeing’s total debt to capital is 88.24% compared with General Dynamics’ 21.89%. 
 

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The time-to-interest earned ratio for Boeing and General Dynamics is 2.1 and 22.4, respectively. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

BA & GD’s Price Performance

In the past six months, shares of General Dynamics have risen 4.2%, while those of Boeing have declined 8.6%. The industry has declined approximately 14.1% during the same period.

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BA or GD: Which Is a Better Choice Now?

Boeing continues to benefit from strong defense demand, a growing contract pipeline and key program milestones that are advancing major platforms toward production and long-term fleet support. General Dynamics continues to benefit from strong defense spending and robust demand, with a growing backlog and major contract wins supporting strong revenue visibility and long-term growth, particularly in its Marine Systems business.

Our choice at the moment is General Dynamics, given its better debt management and price performance than Boeing. Both BA and GD carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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