Boeing's Defense Unit Steers to New Heights on Expanding Backlog

The Boeing Company’s (BA) defense business has been a stabilizing pillar for the aerospace giant as its commercial division, despite showing growth traits lately, continues to face supply-chain and regulatory challenges, particularly for the 737 line. In the latest quarter, Boeing’s Defense, Space & Security (“BDS”) segment generated $6.6 billion in revenues, accounting for nearly one-third of total sales, underscoring its strategic importance.

The unit posted a 10% year-over-year revenue increase in the second quarter of 2025. Another key performance indicator, the segment’s backlog, surged to $74 billion from $61.6 billion in the prior quarter and $64 billion at 2024-end. This robust pipeline highlights strong demand for Boeing’s defense and space products from the U.S. Department of Defense, NASA, and international customers, while also ensuring the BDS unit’s long-term revenue visibility.

Industry tailwinds like heightened geopolitical tensions, higher U.S. and allied defense budgets, expanding commercial launch services, and increasing space-based systems’ usage in national security are supporting this unit’s growth. At the same time, BDS is leveraging its own capabilities in technological innovation and operational improvements to drive performance.

One notable program is the MQ-25 Stingray unmanned refueling aircraft, which has been undergoing ground testing lately, with the first engineering development model expected to fly by 2025-end. On the operational side, Boeing is focusing on stabilizing fixed-price development programs, improving cost controls, and driving efficiency. The appointment of Steve Parker as the new CEO of this unit this July further underscores management’s commitment to margin recovery.

With a swelling backlog and ongoing initiatives to strengthen execution, Boeing’s defense and space business is positioned to offset commercial volatility and steer the company toward long-term growth.

Other Defense Stocks With Robust Backlog

Apart from Boeing, other prominent defense stocks like Lockheed Martin (LMT) and Northrop Grumman (NOC) also reflect solid backlog strength, indicating a steady order flow each quarter for their respective defense products.

Notably, Lockheed’s backlog as of June 29, 2025, totaled $166.5 billion. Of this backlog, LMT expects to recognize approximately 38% over the next 12 months and a total of roughly 64% over the next 24 months as revenues, with the remainder recognized thereafter.

On the other hand, Northrop’s backlog as of June 30, 2025, totaled $89.7 billion. Of this backlog, the company expects to recognize approximately 40% as revenues within the next 12 months and 65% within the next 24 months, with the remainder recognized thereafter.

The Zacks Rundown for BA

Shares of Boeing have risen 35.1% in the past year compared with the industry’s growth of 11.2%.

From a valuation standpoint, BA is currently trading at a forward 12-month sales multiple of 1.91, a discount when stacked up with the industry average of 2.33.

The Zacks Consensus Estimate for BA’s near-term earnings suggests a mixed movement over the past 60 days.

BA stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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