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4 Takeaways From the Defense Budget Request

The proposal is mostly in line with our expectations, and our valuations haven't changed.

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The Department of Defense has submitted its fiscal 2020 budget proposal to Congress. The $718 billion request represents a 5% increase over fiscal 2019. However, the $247 billion in investment funding (procurement and research, development, test, and evaluation, or RDT&E) is more pertinent for defense companies and is slated to rise only 2% year over year. Despite this lackluster growth, the budget is in line with our expectations, and we’re not moving our fair value estimates for the contractors we cover.

We see four takeaways for investors:

Chris Higgins does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.