German Defense: Spending Spree?

A Bloomberg article today (here) highlighted the potential need for Germany to invest more in its defenses, in light of recent geopolitical instability.  As a percent of GDP, defense spending has been falling since the early 1990's.  However, if we look at absolute spending levels, yearly totals have recently matched or even exceeded those reached more than 20 years ago:



While we have no special insight into government contracts or specific agreements, we are able to see which MSCI Europe Aerospace & Defense companies might have benefited from increased spending on national security. As a whole, the group has performed well among its Industrial peers over various time periods:



A look at the constituents of this group shows positive price performance over the last month with more mixed results when other time slices are considered:



In our point-and-figure methodology, we can see the mostly positive trends over the last year or so-- but, as the table above points out, many of those are being tested:










In addition, sales and earnings estimates are not overwhelmingly positive:




Perhaps Germany has chosen different vendors for its defense needs?  It is worth noting that the average European company in this group spends about 3.3% of sales on R&D while those in North America spend slightly more at 3.5% of sales.