The Boeing Company BA is best known for its commercial aircraft business, but its Defense, Space & Security (“BDS”) segment could become an increasingly important contributor to future growth. In the second quarter of 2026, BDS revenues increased 13% year over year to $7.5 billion, driven by higher volume across the portfolio.
A key advantage for Boeing is the size of its defense backlog. BDS ended the second quarter with approximately $85 billion of backlog. Importantly, 27% of this backlog represents orders from customers outside the United States, providing Boeing with exposure to international defense demand. The backlog spans aircraft, weapons, space and communications programs, giving the segment a diversified pipeline of contracted work that supports revenue visibility for several years.
Several major programs are also moving from development toward production. During the quarter, Boeing's MQ-25A Stingray completed its first flight and received Milestone C, clearing the program to enter low-rate initial production. The U.S. Air Force's T-7A Red Hawk also achieved Milestone C and began low-rate initial production.
Boeing is also benefiting from demand across other areas of the defense market. Earlier in 2026, the company signed a seven-year framework agreement to expand PAC-3 Seeker production and announced a strategic partnership with Rheinmetall to offer the MQ-28 Ghost Bat to Germany. The company also continues to see opportunities in secure communications and space, highlighted by a U.S. Space Force award for proprietary communications capabilities in the second quarter. These programs position BDS across several areas of modern defense spending rather than relying on a single aircraft platform.
Companies Benefiting From the Trend
The broader increase in defense spending is creating opportunities across aerospace and defense. General Dynamics GD is positioned to benefit from elevated defense spending through its submarines, armored vehicles and munitions businesses, supported by strong demand from the U.S. and international customers. RTX Corporation RTX could benefit from rising demand for missiles, air-defense systems, sensors and other advanced defense technologies as governments prioritize modernizing military capabilities.
BA Stock’s Earnings Estimates
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates a year-over-year improvement of 91.82% and 552.32%, respectively.
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BA Stock Trades at a Discount
In terms of valuation, BA’s forward 12-month price-to-sales (P/S) is 1.53X, a discount to the industry’s average of 2.45X.
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BA Stock’s Price Performance
In the past six months, the company’s shares have lost 9.6% compared with the industry’s 15.4% decline.
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BA’s Zacks Rank
The company currently has 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).