(BFM Stock Exchange) – Based on CompaniesmarketCap.com, we have established the classification of defense companies with the largest market capitalization. The hierarchy remains dominated by the United States.

With the renewed geopolitical tensions, the defense ended up on the front of the stage, especially on the stock market. In Europe, this sector is clearly the big winner of this start of the year.

The Stoxx Europe Aerospace & Defense index has been winning 29% since January 1. By excluding the actions of this index more exposed to civilian than in defense, Morgan Stanley calculated, in a note published last week, an average increase of 68% on a dozen values

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After such increases, where are European defense groups listed in the global hierarchy? What are the companies in the sector with the most important capitalizations?

To find out, we based ourselves on the ranking established by CompaniesmarketCap.com.

Note, however, that it is difficult to categorize a defense company. Most groups of income from military budgets also have civil activities. Boeing remains a key player in defense, but its other trades, such as civil aeronautics and space, are much more important. Moreover, the classification of Companiesmarketcap.com does not include Boeing or Airbus, defense activities constituting only 18% of the revenues of the European company.

We therefore took this ranking and operated on retreats by leaving certain companies whose defense income represented less than 40% of the total. This led us to exclude the American Honeywell (137.25 billion dollars in market capitalization) as well as the French Safran, the defense constituting only about 20% of its income, according to the estimates of Bank of America.

Which leads to the list presented in the infographic below (**):

A top 4 dominated by the United States

Ultimately, the hierarchy remains dominated by the United States. The American Raytheon Technologies remains the largest defense group on the stock market with a capitalization of $ 177 billion. About 54% of its income is taken from the defense, which includes radars, sensors, engines, missiles, including tomahawk missiles.

Raytheon is followed by the famous Lockheed Martin ($ 104 billion), known in particular for his F16 and F35 combat aircraft. Northrop Grumman is in the third place ($ 74.1 billion) and develops products such as the Bombardier F21, ammunition, cybersecurity or machine guns. General Dynamics (72.64 billion dollars), which designs for example nuclear submarines, frigates or tanks, fails at the foot of the podium.

Another American company is in this top 10, namely L3harris Technologies, eighth with $ 39.2 billion. In particular, it produces fever and military communication systems.

The first European group is Rheinmetall (fifth with $ 61.5 billion), the star of the Frankfurt Stock Exchange, who notably designs armored army for the German army and who saw its course be multiplied by eleven since the breakup of war in Ukraine. Then comes the British Bae Systems ($ 59 billion), present both on air, land and sea systems.

The only real defense representative on CAC 40, Thales arrives in seventh place ($ 55 billion).

The Indian Hindustan Aeronautics is ninth with a market capitalization of $ 32.69 billion.

The ex-finmeccanica Leonardo, who also collaborates with Thales in space, closes the top 10 with 28.15 billion dollars.

We have “cheated” and we are allowed to mention in Infographic Dassault Aviation, the Rafale manufacturer, eleventh with 26.14 billion dollars.

Better valued European groups

If, therefore, European defense companies remain less large, in capitalizations, than their American counterparts, more or less expensive? In other words, do their shares exchange with multiple scholarship holders more or less generous?

In a recent note, Jefferies noted that European defense titles were now being treated with a 40% bonus compared to the actions of American companies in the sector, on the basis of the operating result expected over the next twelve (with a multiple around 17 for Europeans and around 12 for Americans).

If European groups have been brought to the stock market by the multiple advertisements of military budgets in Europe, the Americans have suffered budget reduction in the Pentagon, in connection with the potential risks linked to the DOGE (“Department of Effective Effective”), the entity piloted by Elon Musk and which has ax in federal expenses.

Historically, European defense groups are treated rather with a discount compared to their American peers, due to lower profitability. “Although the gap begins to be reduced, the margins of American defense groups have always been 1.5 times higher than those of Europe,” noted Goldman Sachs in early March. The American bank notably underlined the heavy R&D subsidies while “European companies invest their own capital”.