Research

Does government contract flow move aerospace stocks?

We track every federal aviation-parts contract action and can attribute 88% of the dollars to a listed parent company. So we asked the obvious question: when a company's weekly contract flow jumps far above its own norm, does its stock do anything different over the following month? This page is the answer, rescored every week. It is a study, not a signal service, and nothing here is investment advice.

The short answer

For the primes and large-caps, no. Across 11,175 company-weeks, a big award week is followed by returns indistinguishable from any other week (hit rate 51% for the primes, 49% for large-caps). A $40M award is a rounding error to Lockheed, and the market already read the DoD announcement.

For mid-caps, maybe. On the 424 weeks where a mid-cap's flow ran at least one standard deviation above its own trailing year, the stock beat the aerospace ETF by +1.76% on average over the next 20 trading days, and was ahead 56% of the time, against +0.44% and 51% in ordinary weeks. That is a small edge with a real sample behind it, and one big caveat: almost all of those weeks are from 2019 onward, so there is no earlier period to confirm it against. It stays on probation until there is. The chart by year below is how it earns its way off, or does not.

Signal strength against what actually happened

Mean excess return over the iShares U.S. Aerospace & Defense ETF (ITA) in the 20 trading days after the signal was knowable, by how unusual that week's flow was. Hover for sample sizes.

Mid-caps, year by year

High-signal weeks against ordinary weeks, each year. If the effect is real it should stay above the ordinary bar most years; if it is noise, it will not.

The numbers

Rank correlation is Spearman's rho between the signal and the 20-day excess return across all weeks; a value near zero means no monotonic relationship. High-signal = flow at least one standard deviation above the company's trailing 52 weeks.

By company (20 or more high-signal weeks)

Airworthiness Directives and Boeing

We ran the same test on weeks in which the FAA published a final Airworthiness Directive against an OEM's products. Boeing is the only name with a large sample and the same sign in both halves of the period: in AD weeks the stock has trailed the ETF over the following month, in both eras. The second era includes the 737 MAX grounding, which may be doing most of the work, so this is noted rather than claimed.

The scoreboard: high-signal weeks in the last six months

Every week that crossed +1σ, what the stock then did. Blank means the 20 trading days have not elapsed yet; it fills in on its own.

Method

This page is a record of public contracting data and public price history and a statistical description of their relationship. It is not investment advice, it is not a recommendation to buy or sell any security, and past relationships, however measured, do not predict future returns. PartsAndPlanes holds no positions in the companies named. Company pages: contract flow by listed parent.