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Life has two constants: death and taxes. But if you were to add a third, it might be the U.S. military expanding its annual budget. And now that the war in Iran has drastically depleted the coffers, the U.S. military is once again fiending for firepower. The Pentagon is requesting $1.1 trillion in discretionary spending for fiscal 2027, including a 188% increase in funds for missile procurement. This spending typically flows into the pockets of the aerospace industry, but not evenly.

Today, we’ll look beyond the prime contractors like Lockheed Martin Inc. NYSE: LMT and RTX Inc. NYSE: RTX to three lesser-known defense stocks. Each company posted a record backlog in its most recent earnings report, but record backlogs don’t always translate into record profits. We’ll dig into the numbers and find out which company is best positioned to actually monetize its growing order book.

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ATI: Specialty Materials Producer With Pricing PowerAllegheny Technologies Incorporated, better known as ATI Inc. NYSE: ATI, is the largest company on our list, with a $27.8 billion market cap and more than $4.5 billion in trailing 12-month sales.

ATI Today

$210.52 -0.13 (-0.06%)

As of 09/4/2026 03:58 PM Eastern

$74.45▼

$243.5761.74

$232.00

Much of the company’s recent growth has come from transforming the Flat Rolled Products segment into Advanced Alloys and Solutions (AA&S). Flat Rolled Products was a cyclical industrial segment making steel, nickel, and plate metal products. But AA&S has become a crucial defense supplier, and aerospace now makes up more than 44% of segment revenue according to the company’s Q2 2026 numbers.

ATI has built its niche around hafnium and zirconium, two minerals only a handful of firms worldwide can produce to aerospace and military standards.

Defense demand has run hot enough that the company has deliberately withdrawn capacity from other segments to reallocate it to defense orders with closer delivery dates. ATI expects to deliver 70% of its record $4.4 billion backlog within the next 12 months. Management believes AA&S margins are sustainable in the mid-20% range, giving the company pricing power that the other two on our list can’t match.

ATI also has the cleanest chart of the three stocks, with strong support along the 50-day moving average (MA) and a Relative Strength Index (RSI) that rarely stays below 50 for long. We’ve reached another inflection point with shares testing the 50-day MA, which has been a good entry point for investors on the past three occasions.

Astronics: Cleanest Defense Link But Highest LeverageIf you want to crank up the risk/reward level of your mid-cap defense stocks, Astronics Corp. NASDAQ: ATRO can provide the leverage.

Astronics Today

$76.26 0.00 (0.00%)

As of 09/4/2026 04:00 PM Eastern

$30.72▼

$94.4644.86

$74.17

The company recorded less than $950 million in sales in the last 12 months, but its rapid growth in onboard flight hardware and components has driven the stock up more than 65% year-to-date (YTD).

Astronics reported $260 million in revenue during its Q2 2026 earnings call, with more than $237 million coming from the Aerospace segment. Total revenue was up 27% year-over-year (YOY), book-to-bill was 1.18, and the backlog stands at a record $780 million (with the bulk again devoted to Aerospace). But this growth has been funded by debt, and the company’s debt-to-equity ratio is 1.57, implying a highly leveraged firm. Astronics needs to keep growing to maintain its valuation, and any slowdown in revenue or bookings could cause a sharp re-rating.

ATRO shares have a beta of 1.20, meaning the stock is 20% more volatile than the total S&P 500 index. High-beta stocks often create false technical signals, as we saw in July when the stock dipped below the 50-day moving average after a bearish cross on the Moving Average Convergence Divergence (MACD) indicator. Day and swing traders may find stocks like ATRO more enticing, but the long-term trend is still pointing up, and the company did just guide its first-ever $1 billion sales year.

Ducommun: Strongest Backlog Masks Guidance DecelerationDucommun Inc. NYSE: DCO is the prime example of why headline backlog numbers require further scrutiny. Backlogs and order books are leading indicators because they reflect bookings from future customers, not revenue the company has already realized.

Ducommun Today

$167.93 -0.39 (-0.23%)

As of 09/4/2026 03:58 PM Eastern

$84.76▼

$210.39$192.60

But backlogs leave a lot to the imagination; they don’t tell us the quality of the orders, how long they will take to complete, or what margin the company can charge for future business.

Ducommun, a $2.5 billion market-cap electronic systems manufacturer, has the best backlog optics of the three stocks on today’s list, and its quarterly book-to-bill rate of 1.4 is higher than that of Astronics (ATI does not report book-to-bill).

The company has $1.16 billion in remaining performance obligations, but management’s guidance during the fiscal Q2 2026 earnings release dampened the headline numbers. Q2 revenue rose 12% YOY to a record $224.5 million, with missile revenue up 68% in the period and gross margins expanding to a company record 28%.

But then came the guidance: a reiteration of the previous quarter's figures, with high single-digit growth in fiscal 2026 but low single-digit growth in Q3 and Q4 due to commercial destocking and aerospace production being pulled forward. The order book might be growing quickly, but Ducommun doesn’t expect to convert those orders into revenue before the end of the fiscal year. Meanwhile, the missile program continues to do the heavy lifting, while the space, radar, and naval platforms segments all declined in Q2.

DCO shares are still up more than 70% YTD, but post-earnings profit-taking now risks turning into a full-fledged decline. The stock has closed lower than it opened in 11 of the last 12 trading sessions, and now the 50-day moving average support level has been broken. The RSI confirmed the downward pressure with a move below the 50 midpoint, signaling that sellers currently have control of the stock’s momentum. The next earnings report isn’t until Nov. 5, so expect more volatility in the weeks ahead for DCO.

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Let the Good Times Roll: 2 Stocks Showing No Signs of SlowingAstronics NASDAQ: ATRO reported record second-quarter 2026 revenue, bookings, backlog and operating profit, citing stronger aerospace demand, production efficiencies and pricing actions. The company raised its full-year revenue outlook to a range of $1.02 billion to $1.04 billion, positioning it to surpass $1 billion in annual sales for the first time.

“The second quarter was very strong for Astronics,” Chairman, President and Chief Executive Officer Peter Gundermann said. “We set records all over the place for revenue, for operating profit, for bookings, for backlog, and more.”

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Astronics Corporation: Up 100% YTD in May and Heading HigherSecond-quarter sales rose 27% year over year to a record $260 million. Adjusted EBITDA reached $51.5 million, more than double the prior-year amount, while adjusted EBITDA margin expanded to 19.8% of sales. Net income was $35.1 million, or $0.75 per diluted share, and adjusted net income was $32.6 million, or about $0.70 per diluted share.

Margin Expansion Driven by Volume and Productivity Chief Financial Officer Nancy Hedges said gross profit totaled $86.9 million, or 33.4% of sales, compared with $52.8 million, or 25.8% of sales, a year earlier. The improvement reflected higher sales volume, better productivity and a $2 million IEEPA tariff refund recognized during the quarter. The refund contributed roughly 70 basis points to margin.

5 Small-Cap Stocks to Watch for Big Speculative GainsThe company estimates that tariffs, before mitigation efforts, represent an ongoing expense run rate of approximately $3 million to $4 million per quarter at current volumes. Astronics expects to receive an additional $6 million to $8 million in IEEPA tariff refunds, although the timing remains uncertain.

Gundermann identified four primary drivers of the company’s margin improvement:

Higher volume and improved overhead absorption as shipments increase; Pricing actions, including the repricing of long-term contracts affected by pandemic-era inflation; Better workforce efficiency as employee turnover has declined; and Organizational simplification, including the closure and consolidation of seven production sites in recent years. Astronics said it has repriced most of its affected long-term contracts, though roughly one-quarter remain to be repriced over the next 12 to 18 months. Gundermann said the company is about 75% to 80% through its broader pricing-adjustment effort.

Aerospace Sales and Backlog Reach Records Aerospace segment sales increased 22.6% from the prior-year period to a record $237.3 million, supported by growth across commercial transport, military aircraft and general aviation markets. Segment operating profit rose to $48.3 million, or 20.3% of sales, from $18 million, or 9.3% of sales, in the year-earlier quarter.

Among the segment’s product categories, in-flight entertainment and connectivity sales increased 19% to $126 million, aided by demand for connectivity and passenger-power products. Lighting and safety sales rose 5.5% to $59.2 million, while flight-critical electrical power sales increased 49.4% to $23.7 million, led by military-aircraft demand.

Seat-motion sales rose $12 million to $22.2 million, including a $5.9 million contribution from the Bühler Motor Aviation acquisition completed last October. Gundermann said the acquired business has good technology, products and customer relationships, but is not yet as profitable as Astronics’ broader aerospace operation.

Aerospace bookings totaled $243.1 million, producing a book-to-bill ratio of 1.02. Segment backlog ended the quarter at a record $657.2 million.

Military Programs Add to Test Systems Opportunity Total company bookings were a record $306 million, continuing a four-quarter progression from $210 million, $257 million and $290 million. The quarter included a $27.4 million booking for the engineering phase of the V-280 FLRAA program, which Astronics said is expected to generate approximately $35 million of revenue in 2026.

The V-280 FLRAA program supports the U.S. Army’s planned MV-75 replacement for the Black Hawk helicopter. Gundermann said the program could become Astronics’ largest military program, though the company did not provide details beyond its current engineering work and expected future orders.

Test systems sales increased to $22.7 million from $11.1 million a year earlier. The segment reported operating profit of $600,000, compared with an operating loss in the prior-year period. Results included about $4.1 million of zero-margin revenue, mainly for raw-material purchases related to U.S. Army and Marine Corps radio-test programs.

Test systems bookings reached $63.1 million, including a $44.7 million U.S. Army order initiating full-rate production for the TS-4549/T radio-test program. The order is expected to support deliveries over the next 18 months, and Astronics expects similar annual orders for the next four to five years under its existing IDIQ award.

Management said margins in the test systems business should improve as the radio-test program enters full-rate production. Gundermann said the company expects to reach that production pace by the end of the fourth quarter, with margins eventually approaching the profile of its aerospace segment.

Cash Flow, Debt Reduction and Outlook Astronics generated $30.1 million in operating cash flow during the second quarter. Capital expenditures were $5.7 million during the quarter and $16.9 million through the first half. The company continues to expect full-year capital spending of $40 million to $45 million, including investments related to a Seattle facility consolidation expected to conclude in the third quarter.

Long-term debt declined by $24.1 million from year-end to $310.3 million, while available liquidity totaled $253.2 million at quarter-end. Hedges said Astronics’ capital priorities remain internal investment and debt reduction, although acquisitions remain possible if opportunities meet the company’s criteria.

For the third quarter, Astronics expects revenue of $265 million to $275 million, which would represent another quarterly sales record. Management expects the fourth-quarter revenue run rate to improve modestly from that level and said it expects to be free-cash-flow positive for the remainder of 2026.

Gundermann also said the company sees future opportunities in electric vertical takeoff and landing aircraft, drones and autonomous aircraft, particularly for its power-generation technologies. However, he said those programs are not expected to make a major contribution to the company’s 2026 forecast and may have a greater role in 2027.

About Astronics (NASDAQ:ATRO)Astronics Corporation NASDAQ: ATRO is a global leader in the design and manufacture of advanced technologies primarily for the aerospace, defense and semiconductor industries. Headquartered in East Aurora, New York, the company was founded in 1968 and has grown through a combination of internal development and strategic acquisitions. Astronics operates multiple business units focused on power conversion, distribution and control; cabin electronics and connectivity; aircraft lighting and safety solutions; and automated test systems.

The company's aerospace products include onboard power generation and management systems, in-flight entertainment and connectivity hardware, LED and fluorescent lighting for aircraft cabins and cockpits, and safety equipment such as escape slide power units.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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Should You Invest $1,000 in Astronics Right Now?Before you consider Astronics, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Astronics wasn't on the list.

While Astronics currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

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LONDON & EAST AURORA, N.Y.--(BUSINESS WIRE)--Vertical Aerospace ("Vertical" or the "Company") (NYSE: EVTL), a global aerospace and technology company that is pioneering electric aviation, today announced a long-term agreement with Astronics Corporation (NASDAQ: ATRO), a leading provider of advanced technologies for the global aerospace, defense and other mission critical industries, to supply the low-voltage ("LV") power distribution system for Vertical's Valo electric vertical take-off and landing (eVTOL) aircraft.

Under the agreement, Astronics will provide the aircraft's LV power distribution system, including power conversion and distribution hardware that manages and protects electrical power for critical aircraft systems. The system converts high-voltage electrical power from the aircraft's propulsion architecture into low-voltage power used by avionics, flight controls and other essential onboard systems.

Astronics has supported Vertical throughout the prototype phase of aircraft development, with its hardware already integrated into Vertical's piloted flight test aircraft. The company's purpose-built eVTOL electrical power solutions and extensive aerospace experience make it the ideal supplier for Valo as Vertical advances toward certification and commercial production.

This agreement further strengthens Vertical's supplier ecosystem across Valo’s key aircraft systems, including leading suppliers such as Honeywell (flight control and aircraft management systems), Aciturri (airframe structures), Evolito (electric propulsion units), Hyundai WIA (landing gear), Syensqo (composite materials) and Isoclima (transparencies).

Stuart Simpson, CEO of Vertical Aerospace, said:

"Building a certifiable aircraft requires not only breakthrough technology, but also a world-class supplier ecosystem. Astronics brings deep expertise in aircraft electrical power systems and has already demonstrated its capabilities through our flight test programme. This agreement is another important step as we mature Valo's design, strengthen our supply chain and advance toward certification and commercial production."

Jon Neal, President of Astronics Advanced Electronic Systems, said:

"Astronics is proud to be working with Vertical Aerospace as the supplier of their power distribution system for the Valo aircraft. Our CorePower® system is purpose-built for eVTOL applications, combining high-voltage power conversion with low-voltage power distribution delivering reliable, fault-protected power to flight-critical systems including avionics, flight controls, and navigation. CorePower was designed from the ground up to meet aerospace certification standards, giving our customers a lightweight, compact solution that reduces integration risk and supports their path to type certification. We look forward to continuing our close collaboration with the Vertical team through CDR and Valo's entry into service.”

The announcement follows continued progress on the Valo programme as Vertical advances toward Critical Design Review (CDR), establishing the certifiable design baseline for the aircraft ahead of certification-conforming aircraft production and testing.

About Astronics Corporation

Astronics Corporation (Nasdaq: ATRO) serves the world’s aerospace, defense, and other mission critical industries with proven, innovative technology solutions. Astronics works side-by-side with customers, integrating its array of power, connectivity, lighting, structures, interiors, and test technologies to solve complex challenges. For over 50 years, Astronics has delivered creative, customer-focused solutions with exceptional responsiveness. Today, global airframe manufacturers, airlines, militaries, completion centers and Fortune 500 companies rely on the collaborative spirit and innovation of Astronics. The Company’s strategy is to increase its value by developing technologies and capabilities that provide innovative solutions to its targeted markets. For more information on Astronics and its solutions, visit Astronics.com.

About Vertical Aerospace

Vertical Aerospace is a global aerospace and technology company pioneering electric aviation. Vertical is creating a safer, cleaner, and quieter way to travel. Valo is a piloted, four-passenger, Electric Vertical Take-Off and Landing (eVTOL) aircraft, with zero operating emissions. Vertical is also developing a hybrid-electric variant, offering increased range and mission flexibility to meet the evolving needs of the advanced air mobility market.

Vertical combines partnerships with leading aerospace companies, including Honeywell, Syensqo and Aciturri, with its own proprietary battery and propeller technology to develop the world's most advanced and safest eVTOL.

Vertical has c.1,500 pre-orders of Valo, with customers across four continents, including American Airlines, Avolon, Bristow, GOL and Japan Airlines. Certain customer obligations are expected to be fulfilled via third-party agreements. Headquartered in Bristol, UK, Vertical's experienced leadership team comes from top-tier aerospace and automotive companies such as Rolls-Royce, Airbus, GM, and Leonardo. Together, they have previously certified and supported over 30 different civil and military aircraft and propulsion systems.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements as contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding a long-term supply agreement with Astronics to supply the low-voltage power distribution system for Valo, the design and manufacture of our aircraft and the hybrid-electric variant, certification and the commercialization of our aircraft and our ability to achieve regulatory certification of our aircraft product on any particular timeline or at all, the features and capabilities of the aircraft, business strategy and plans and objectives of management for future operations, including the building and testing of our prototype aircrafts on timelines projected, completion of the piloted test programme phases, selection of suppliers; as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate,” “will,” “aim,” “potential,” “continue,” “are likely to” and similar statements of a future or forward-looking nature. Forward-looking statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation, the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) on March 24, 2026, as such factors may be updated from time to time in our other filings with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. We disclaim any obligation or undertaking to update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.