York Space’s rapid backlog growth, along with its ability to obtain many large contracts in the future from the Pentagon and other companies, leaves YSS stock poised to soar over the longer term.
Additionally, prominent investment bank Jefferies is bullish on YSS stock, while the shares’ valuation is quite low, given the company’s powerful growth and tremendous potential.
In light of all of these points, long-term growth investors should consider buying the shares of the company, which specializes in developing spacecraft, including communications satellites.
Rapid Backlog Growth and a Likely Beneficiary of Future, Large Pentagon Deals
As of the end of the first quarter, York’s backlog jumped 18% versus the end of the fourth quarter to $642.3 million. The backlog was boosted by a $187 million contract with unnamed commercial customers. Under the deal, YSS will build “20-plus” satellites, and the firm is likely to obtain orders for more satellites from these customers, York CEO Dirk Wallinger reported on its Q1 earnings call.
Further, in May, York disclosed that it had obtained multiple indefinite delivery, indefinite quantity (IDIQ) contracts from the Pentagon related to “the development and deployment of critical national defense and warfighter space capabilities,” These deals show that York’s offerings remain appealing to both the Department of War and commercial entities.
Wallinger estimated that the firm can compete for $1.5 billion of contracts involving the Space Data Network which is supposed to be “a multi-orbit, hybrid satellite communications architecture comprising both military-owned and commercial systems built by different vendors.” The system will facilitate the transfer of data ” to ground stations and weapons platforms.”
Meanwhile, York’s acquisition of All.Space, which provides “jam-resistant” communications, will enable YSS to begin providing communications capabilities for the fast-growing military-drone market, Wallinger indicated. All.Space, which reportedly generated revenue of about $28 million last year, already has deals with the Army and Navy, showing that its communications system is trusted by the Pentagon,
And finally, as I noted in a previous column, York is well-positioned to benefit from Golden Dome, the Trump administration’s massive missile-defense initiative, as the firm can “execute across nearly every Golden Dome mission set.”
Jefferies Is Bullish on YSS Stock and Its Valuation Is Attractive
Praising the acquisition of All.Space, Jefferies analyst Sheila Kahyaoglu said, “integrating ALL.SPACE’s jam-resistant, multi-link terminal technology with York’s space infrastructure creates an assured communications ecosystem across space, land, air, and maritime domains.” Kahyaoglu, who has a Buy rating on the name, added that YSS can benefit from the initiatives of the Space Development Agency, along with Golden Dome and demand by intelligence agencies.
Kahyaoglu has a $32 price target on YSS.
On the valuation front, the shares change hands at a forward price-earnings ratio of35 times, based on analysts’ average 2027 earnings per share forecast for York.
Given the company’s potential strong, positive catalysts and the rapid growth of its backlog, that’s a very low valuation.
*This article is intended to be informational only; it is not financial advice.
