July 2026
Defense Companies Valuation - Europe vs US
Last updated on 09 April 2025·Defense·Europe, United States & Canada
European defense stocks trade higher than American comps
Growing political tensions forced Europe to take matters into its own hands, and markets noticed - European defense stocks trade significantly higher than American counterparts, and much higher than the famous US tech Magnificent 7.
The European Defense 7 (Rheinmetall, Thales, BAE Systems, Rolls-Royce, Leonardo, Safran, Dassault Aviation) show substantial valuation multiple growth and much better performance compared to the US Defense 10 (GE Aerospace, Boeing, RTX, Lockheed Martin, TransDigm, General Dynamics, Howmet Aerospace, Axon, L3Harris, Northrop Grumman).
European publicly-listed defense companies outperform American ones by a huge margin
Since April 2020, European defense stocks have massively outperformed their American peers. A basket of seven European defense companies — Rheinmetall, Thales, Leonardo, Dassault Aviation, BAE, Rolls-Royce, and Safran — has delivered a 330% return in market cap terms, nearly three times the 113% gain posted by the ten largest US defense names including RTX, Boeing, Lockheed Martin, and Northrop Grumman.
Ongoing geopolitical tensions bring valuation premium for European defense comps
European defense EV/NTM revenue multiples have expanded by 365% since April 2020, compared to 192% for the US group. This widening valuation premium reflects investors pricing in a structural increase in European military spending driven by ongoing geopolitical tensions.
European defense stocks vastly outperform also the famous American ‘Magnificent 7’
European defense stocks have also outperformed the famous US Magnificent 7 tech giants. The 330% return from the European defense basket dwarfs the Mag 7's 77% gain over the same period, making European defense one of the best-performing public equity themes globally over the past five years.
Significant valuation premium for the European defense in the last few months, even compared to the Mag 7
The valuation re-rating story holds up against Big Tech too. European defense revenue multiples have expanded 365% versus 225% for the Magnificent 7, showing that even compared to the most hyped segment of global equities, the market's appetite for European defense exposure has been significantly stronger in recent months.
Methodology
The analysis is built on Multiples' data, powered by FactSet consensus analyst estimates and Morningstar historical data. Financial data is calendarized to December year-ends and harmonized to USD. The European basket includes Rheinmetall, Thales, Leonardo, Dassault Aviation, BAE, Rolls-Royce, and Safran; the US basket includes RTX, Boeing, Lockheed Martin, TransDigm, Northrop Grumman, General Dynamics, Howmet Aerospace, Axon Enterprise, and L3Harris.
Data and methodology
Underlying data
Public markets data is powered by FactSet (consensus analyst estimates), and Morningstar (historical data). Data points are calendarized to December where relevant: retrieved data on financial year ends (e.g. FY, FY+1 etc.) are mapped to calendar years (2025A, 2026E etc.) before the appropriate month weights are then applied to prior/future fundamentals.
Private transaction data is multi-sourced, aggregated from harvesting public information, 3rd party APIs, and data engineering. All data is verified and provided with an extensive manual process. If data permits, we apply our own logic to get to the EV. For example, for a large M&A deal with available information on the target's net debt, we might adjust a valuation to fully reflect an accurate EV. In all other cases, we take the reported valuation as the numerator. Financials: we source LTM revenue and LTM EBITDA data from company filings, press releases, or other verified sources. If LTM data is unavailable, we take the 'next best-fit' period (run-rate or calendar year), provided it makes sense in a given case. For example, if a deal closed in November 2025, we might take full-year 2025 revenue as a revenue benchmark.
Any raw figures are harmonised to USD for comparison purposes.
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