In this article, we will discuss the 5 Most Undervalued Defense Stocks to Buy According to Analysts. For deeper discussion and analysis, read 10 Most Undervalued Defense Stocks to Buy According to Analysts.

5. Huntington Ingalls Industries, Inc. (NYSE:HII)

Forward P/E: 17.67

Huntington Ingalls Industries, Inc. (NYSE:HII) entered into a memorandum of understanding with Applied Intuition on April 21 to collaborate on the development of AI-enabled capabilities for next-generation naval platforms. The partnership focuses on advancing “Warship OS,” enabling AI-defined warships designed to support autonomous and manned-unmanned teaming operations, reflecting a broader push toward software-defined naval systems.

On the same day, Huntington Ingalls Industries, Inc. (NYSE:HII) announced plans to expand production of its Romulus 151 unmanned vessels, with four additional units to be built in Louisiana alongside an initial prototype already under construction. Management emphasized that the program reflects a shift toward scalable unmanned maritime capability, combining autonomy, shipbuilding expertise, and industry partnerships to accelerate fleet deployment.

Huntington Ingalls Industries, Inc. (NYSE:HII) is a leading U.S. naval shipbuilder specializing in the design, construction, and maintenance of nuclear-powered aircraft carriers and submarines, as well as surface combatants for the U.S. Navy and Coast Guard. The company is headquartered in Newport News, Virginia, and was formed in 2011.

The collaboration with Applied Intuition and the expansion of unmanned vessel production highlight HII’s strategic pivot toward AI-integrated naval warfare capabilities. These initiatives strengthen its long-term positioning in next-generation defense systems, where autonomy and rapid deployment are becoming increasingly critical.

4. General Dynamics Corporation (NYSE:GD)

Forward P/E: 17.38

General Dynamics Corporation (NYSE:GD) secured a $196.55 million cost-plus-fixed-fee contract on April 24 to support engineering, technical design, and design transfer activities related to nuclear submarine capabilities and sustainment for foreign military sales programs. The contract includes optional extensions that could raise its total value to $930.41 million, with work scheduled through at least 2027 and potentially extending to 2031 if options are exercised. Funding is primarily sourced from foreign partners, underscoring strong international demand for U.S. submarine technology.

On April 8, Deutsche Bank downgraded General Dynamics Corporation (NYSE:GD) to Hold from Buy and reduced its price target to $387 from $404, citing concerns over valuation. The firm noted that the stock now trades at a premium relative to the S&P 500 compared with its historical discount and warned that its relative growth advantage may gradually narrow over time.

General Dynamics Corporation (NYSE:GD) is a leading U.S. aerospace and defense contractor engaged in submarine construction, combat systems, business aviation through Gulfstream, and advanced defense technologies. The company is headquartered in Reston, Virginia, and traces its origins to 1952, with earlier historical roots extending back to 1899.

The latest contract win reinforces General Dynamics’ strong positioning in high-barrier, long-cycle defense programs with significant international demand. While valuation concerns may weigh on sentiment in the near term, sustained defense spending and multi-year contract visibility continue to underpin the company’s long-term earnings stability.

3. Embraer S.A. (NYSE:EMBJ)

Forward P/E: 17.12

Embraer S.A. (NYSE:EMBJ) saw mixed analyst activity in recent weeks, with UBS lowering its price target on the stock to $65 from $69 while maintaining a Neutral stance on March 26. The revision reflected a more cautious near-term outlook despite continued interest in the company’s aircraft delivery trajectory and backlog strength.

On March 10, JPMorgan raised its price target on Embraer S.A. (NYSE:EMBJ) to $84 from $80 while maintaining an Overweight rating, citing improved post-Q4 model assumptions and attractive valuation levels. The firm highlighted that Embraer’s discount to peers is expected to narrow over time, supported by strong growth prospects, improving returns, and a record backlog.

Embraer S.A. (NYSE:EMBJ) is a Brazilian aerospace manufacturer engaged in the design, development, production, and sale of aircraft across commercial, executive, defense, and agricultural aviation segments. The company is headquartered in São José dos Campos, São Paulo, Brazil, and was founded in 1969.

The divergent analyst views highlight both short-term valuation caution and long-term confidence in Embraer S.A. (NYSE:EMBJ)’s structural growth story. Continued backlog strength and improving profitability metrics support the case for sustained re-rating potential as execution remains consistent.

2. Lockheed Martin Corporation (NYSE:LMT)

Forward P/E: 16.05

Lockheed Martin Corporation (NYSE:LMT) faced mixed analyst revisions on April 24, with Susquehanna lowering its price target to $700 from $740 while maintaining a Positive rating following weaker-than-expected first-quarter earnings and free cash flow results. The adjustment reflected near-term financial pressure despite continued confidence in the company’s broader defense portfolio.

On the same day, Morgan Stanley also reduced its price target on Lockheed Martin Corporation (NYSE:LMT) to $653 from $675 while maintaining an Equal Weight rating, citing downward revisions to its 2026 earnings-per-share forecast. The firm adjusted its model following the first-quarter performance that came in below expectations.

Lockheed Martin Corporation (NYSE:LMT) is a global aerospace and defense company engaged in the design, development, and integration of advanced defense systems, including aircraft, missile systems, and space technologies. The company is headquartered in Bethesda, Maryland, and was formed in 1995 through the merger of Lockheed Corporation and Martin Marietta.

Despite near-term earnings pressure, Lockheed Martin Corporation (NYSE:LMT) continues to benefit from its entrenched position in mission-critical defense programs with long-term government demand visibility. The combination of strong defense exposure and persistent geopolitical tailwinds supports its structural investment appeal over the medium to long term.

1. StandardAero, Inc. (NYSE:SARO)

Forward P/E: 15.72

StandardAero, Inc. (NYSE:SARO) announced on April 22 a long-term agreement with Rolls-Royce to provide repair and overhaul support for the MT7 marine gas turbine engine at its Maryville, Tennessee facility. The engine powers the U.S. Navy’s Ship to Shore Connector program, highlighting StandardAero’s expanding role in supporting critical naval mobility infrastructure.

On April 7, Jefferies lowered its price target on StandardAero, Inc. (NYSE:SARO) to $34 from $38 while maintaining a Buy rating, trimming near-term earnings expectations due to slightly weaker organic growth assumptions. The firm still views the company’s fundamentals positively despite modest downward revisions.

StandardAero, Inc. (NYSE:SARO) is a leading independent maintenance, repair, and overhaul provider serving commercial, military, business aviation, and industrial power customers. The company is headquartered in Scottsdale, Arizona, and was founded in 1911.

The long-term Rolls-Royce agreement enhances StandardAero’s exposure to stable, high-value defense-related maintenance contracts. Despite near-term earnings adjustments, its entrenched position in essential aviation and naval support services underpins durable long-term cash flow potential.

READ NEXT: 10 Best European Stocks to Buy According to Analysts and 13 Best Crude Oil Stocks to Buy According to Analysts.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.