While many eyes are on SpaceX (NASDAQ: SPCX), other companies in the industry give investors reasons to watch the skies as well. Quarterly earnings are always a popular way of identifying potential targets in the space and defense industry, but investors may risk overlooking the importance of backlog in this sphere as well. Backlog—work or orders that are contracted but not yet completed or recognized as revenue—is especially key to these firms because they often work on massive contracts spanning multiple years.
Backlog is particularly important at this stage because so many governments around the world are continuing to ramp up defense spending. Add to the mix rising political tensions, a race toward AI-supported tools, and the industry-wide boost from SpaceX's highly visible IPO, and it's easy to see why space and defense companies with robust backlogs and a history of revenue growth are looking especially good heading into the second half of the year.
