Space stocks were one of the worst stocks to bet on in the market, with perpetual losses and sluggish growth. Things have completely changed as space research and spending are paying off. The military is mostly what has been spearheading space growth.

Planet Labs (PL) is a big beneficiary, since it has the world’s largest fleet of Earth observation satellites. It popped by over 42.8% [Monday] after it released stellar Q2 FY2026 earnings results.

Revenue came in at $73.4 million, up 20% year-over-year and exceeding analyst estimates of $66.2 million. Gross profit margin went up 5% to 58%, with positive adjusted EBITDA of $6.41 million (versus an expected loss). Planet Labs also managed to generate $54.3 million in free cash flow year-to-date.

On top of that, the guidance was raised. The full-year revenue outlook has a midpoint of $285 million. The previous guidance was $272.5 million.

All of this is thanks to the company’s pivot toward defense contracts. It managed to ink deals with the German government, NATO, and the U.S. Department of Defense.

Time to buy PL stock?
The fundamentals are unlikely to be worn out soon, as the government is aggressively spending on space-related projects. The Golden Dome project alone could bring in billions in contracts for these space companies, and they trade quite cheaply compared to other cutting-edge fields like software.

PL stock trades at 7.3 times forward sales today. Revenue growth is expected to accelerate in the coming years, with 11.6% growth this fiscal year and 21.7% the next fiscal year. That growth is likely to turn out to be an under-estimate, considering how fast Planet Labs has been landing contracts.

These contracts have caused Planet Labs’ backlog to swell 245% year-over-year to $736 million.

— Omor IE

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Source: Money Morning