In afternoon trading on Jan. 7, after reports that President Trump had suggested he would prohibit US defense contractors’ dividends and stock repurchases, shares of US defense contractors declined by as much as 5%.
Bears say: As on Oct. 15, 2025, when Secretary of the Treasury Scott Bessent made similar remarks, investors seem to have discounted the shares of US defense contractors based on an estimation that the US government can and will restrict share repurchases by US defense contractors.
Key stats: As a group, the top seven US defense contractors have repurchased $128 billion in stock over the last 10 years, representing about 2.5% of their average market capitalization, and a similar proportion of US defense outlays for research, development, procurement, and maintenance during that period.
- Boeing ceased share repurchases in 2019 and effectively reversed all of its buybacks since mid-2017, when it issued $18 billion in new shares to raise capital in 2024.
The bottom line: While share repurchases inform our evaluation of companies’ capital allocation policies, they do not impact our fair value estimates, which reflect the present value of our forecast free cash flow for the firm.
- In our estimation, US defense contractors remain mostly fairly valued after their selloff, ranging from 93% of fair value for Boeing to RTX’s 110%.
