The commercial space sector is no longer a niche curiosity—it’s a full-blown gold rush. And Karman Space & Defense (KRMN) is sprinting ahead of the pack, fueled by a perfect storm of government contracts, defense spending, and the relentless march of private-sector innovation. With profit surging 233% year-over-year and a funded backlog of $719 million, this stock is a high-conviction buy for investors ready to ride the next great industrial revolution.

Karman’s Breakout: A Masterclass in Execution

Karman’s second-quarter results were nothing short of explosive. Revenue hit $115.1 million, a 35.3% jump from the prior year, driven by all three of its core segments:
– Hypersonics and Strategic Missile Defense: +21.6% to $34.96 million.
– Space and Launch: +38.9% to $39.597 million.
– Tactical Missiles and Integrated Defense Systems: +45.9% to $40.54 million.

But the real story is the margin expansion. Non-GAAP adjusted EBITDA soared to $35.3 million, a 28.7% year-over-year increase, while net income nearly doubled to $6.8 million. This isn’t just growth—it’s operational excellence. Karman’s ability to convert revenue into profit, even in a capital-intensive industry, is a testament to its vertically integrated model and firm-fixed-price contracts.

The company’s funded backlog—$719.3 million as of June 30, 2025—adds another layer of confidence. That’s 95% of its 2025 revenue already secured, with visibility into future demand. And with full-year 2025 guidance now at $452–458 million in revenue and $138.5–141.5 million in adjusted EBITDA, Karman is signaling it’s just getting started.

Tailwinds: Government Contracts and a $2 Trillion Space Economy

Karman isn’t just riding its own momentum—it’s hitching a ride to Mars on the U.S. government’s rocket. The Biden administration’s $849.8 billion fiscal 2025 defense budget is a lifeline for companies like Karman, which specializes in hypersonic systems, solid rocket motors, and space-based defense infrastructure. The DoD’s focus on “multi-domain” architectures—linking air, land, sea, and space—has created a $1.2 trillion addressable market for firms with Karman’s expertise.

Meanwhile, the commercial space sector is breaking through regulatory barriers. Executive Order 14335, signed in August 2025, is accelerating launch cadence by streamlining FAA licensing and reducing bureaucratic friction. With 172 commercial spaceflights projected for 2025 (up from 157 in 2024), Karman’s cleanroom facilities in Alabama and Washington are primed to scale. The company’s recent acquisition of Industrial Solid Propulsion (ISP) for $55 million—adding 400+ motor configurations and 14 propellant formulations—positions it as a one-stop shop for propulsion systems in both defense and commercial applications.

Technical Catalysts: A Buy Signal in the Making

Karman’s stock has surged 78.56% over the past six months, but the fundamentals justify even more. At $52.38, the stock trades at a trailing P/E of 873, a premium that reflects its growth trajectory. However, the technical indicators are equally compelling:
– Moving Averages: The 50-day MA at $50.49 and 200-day MA at $49.64 suggest a “Buy” signal for the long term, despite a short-term “Sell” bias.
– RSI: At 45.287, the stock is in neutral territory, avoiding the overbought/oversold extremes that often trigger corrections.
– Volume Trends: Recent spikes in trading volume—driven by the $1.2 billion secondary offering and Q2 earnings beat—indicate strong institutional interest.

Analysts are also piling in. William Blair and RBC Capital Markets have upgraded their price targets to $60 from $50, citing Karman’s strategic acquisitions, debt refinancing, and guidance raise. With a beta of 1.43, the stock is volatile, but its correlation to the S&P 500 (0.31) means it’s less susceptible to broad market downturns.

Why This Is a High-Conviction Buy

Karman’s success hinges on three pillars:
1. Government-Driven Demand: The U.S. Space Force’s modernization push and the DoD’s hypersonic focus are tailwinds that won’t fade.
2. Commercial Space Expansion: With the global space economy projected to hit $2 trillion by 2040, Karman’s dual-use technologies (defense and commercial) give it a unique edge.
3. Financial Discipline: A net debt-to-EBITDA ratio of ~0.5x and a recent $300 million Term Loan B refinancing at lower rates provide flexibility to invest in growth without dilution.

The risks? Regulatory delays or a slowdown in defense spending could temper growth. But with the U.S. government’s fiscal 2025 budget already locked in and private-sector demand for satellite launches surging, these are manageable headwinds.

The Bottom Line: Time to Buy the Rocket Fuel

Karman isn’t just a space stock—it’s a gateway to the next industrial frontier. With profit surging 233%, a robust backlog, and a clear line of sight to $450 million in revenue this year, the company is a rare blend of growth and profitability. At current levels, it’s a high-conviction buy for investors willing to ride the rocket to the stars.

Final Call to Action: For those who missed the Tesla or Amazon of the 2010s, Karman offers a chance to get in early on the next great industrial revolution. Load up on this one—before the next Mars rover launch.