10 Defense Stocks with the Highest EPS Growth in 5 Years

6. Innovative Solutions and Support, Inc. (NASDAQ:ISSC)

EPS Growth, Past 5 Years: 29.67%

Innovative Solutions and Support, Inc. (NASDAQ:ISSC) manufactures and sells advanced avionic solutions to a broad customer base, spanning commercial, military, and business and aviation markets.

Last month, the company unveiled the next-generation Prodigy 3ATI Integrated Standby Unit (ISU) to enhance flight safety, efficiency, and reliability. The unit has set a new standard in aviation instrumentation by consolidating important flight data into a compact display system. The Prodigy 3ATI ISU is available for use on commercial, military, and business aviation applications.

Innovative Solutions and Support, Inc. (NASDAQ:ISSC)’s shares have fallen 33% year-to-date, with a major slump following the earnings call for the first quarter of fiscal year 2025 on January 29. The company reported net revenues of $16 million, representing a 70% year-over-year growth, driven by momentum from new military programs.

However, gross margins dropped from 59.3% last year to 41.4% due to incremental depreciation from recent product line acquisitions. Net income for the first quarter was recorded at $0.7 million or $0.04 a share, missing estimates and down from $1.1 million, or $0.06 per share a year ago.

Despite the crash, experts argue that Innovative Solutions and Support, Inc. (NASDAQ:ISSC) offers a strong risk-reward profile, and the share price could return to the $11-12 range when the market reassesses the company’s earnings power. It has spent a long time shifting toward OEM sales, stabilizing the business. Moreover, the acquisition of Honeywell’s military product is improving revenue predictability.