This article originally appeared on Aviation Week.

So far, the 21st century has been a great time to be the owner of aerospace and defense stocks. Since 2001, publicly traded companies in these industries have outperformed the S&P 500 by nearly 2 to 1 in total shareholder return (TSR), the ultimate measure of a company’s financial performance. (TSR combines stock price changes and dividends.) Such long-term TSR growth primarily results from strong fundamentals, according to Bain & Company research. In fact, about 70% of the TSR growth in aerospace and defense can be attributed to operating profit gains achieved from the combination of strong management actions and market tailwinds. 

But while the long-term results are impressive, more recent TSR performance tells a different story. Since 2012, aerospace and defense stocks have only kept pace with the overall market, and they’ve been able to do this for two basic reasons. First, many companies emphasized “financial engineering,” either in the form of debt payments or large-scale share buy-back programs. Second, multiples expanded as companies more consistently achieved their projected results. Primes led the way during this period, buoyed by multi-billion-dollar buyback programs that helped boost TSR performance. Services and suppliers also saw TSR gains during the period, largely in line with an overall strong stock market.

Read the full article at Aviation Week  (subscription may be required).

Michael Goldberg, a Bain & Co. partner based in Los Angeles, leads its global aerospace and defense practice. Michael Robbins, a Washington-based partner, is a leader of the firm’s corporate finance practice in the Americas.