V2X Stock: Defense Underdog Riding a $4.3B Air Force Contract

Key Points

• Though much smaller than some of its more popular rivals, defense industry firm V2X has noted some recent big wins.
• Strong financials and a major contract with the U.S. armed forces are two important growth catalysts.
• The company's strategy involving acquisitions and share repurchases will also appeal to many investors.

With a market capitalization of just under $2 billion, V2X Inc. NYSE: VVX is a fraction of the size of larger peers in the defense contractor space like Lockheed Martin Corp. NYSE: LMT and RTX Corp. NYSE: RTX. In an environment that is highly favorable to defense firms more broadly, investors may miss out on V2X and other smaller defense firms in a bid to track the household names in this industry.

V2X's smaller size may obscure its potential. The firm has impressed in its earnings performance in recent months, and a major new contract with the U.S. Air Force will be transformational.

Beyond that, cash flow and backlog are continuing to improve, and the company is preparing a significant share repurchase plan as part of its larger capital allocation strategy. All of these signs point to V2X's capacity to continue to deliver on both short—and long-term horizons.

Q2 2025 Earnings Beat Highlights Strong Military Demand

VVX shares popped following its latest earnings release in early August 2025 as the company noted 60% year-over-year (YoY) improvement to adjusted earnings per share (EPS) of $1.33, a full 33 cents above analyst predictions. Revenue was essentially flat YoY but represented a more modest surprise than consensus estimates.

Foreign military sales, continued partnerships with the U.S. Army and Space Force, and extended offerings with Bell Helicopter and other partners drove this performance. For V2X—a firm primarily known for providing operational solutions connecting digital and physical systems—growing military spending around the world creates tremendous opportunity.

Digging deeper into the firm's earnings report, the company's three-year pipeline of more than $50 billion should help it continue to improve other metrics. 

Adjusted EBITDA for the second quarter climbed by 14% YoY as the firm concluded a nonrecurring contractual commitment earlier than expected. Adjusted operating cash flow of $58.3 million gives the firm flexibility, while the company's total backlog at the end of the quarter reached $11.3 billion, which shows just how in demand its services and tools are becoming.

All of these factors have allowed V2X to increase its full-year adjusted EPS guidance to a mid-point of $4.80.

$4.3 Billion Contract Will be Transformational

V2X's backlog, as big as it is, doesn't even include the firm's recently announced landmark contract with the U.S. Armed Forces. The contract, valued at $4.3 billion and over a term of nine years, will see V2X provide supply support for over 700 T-6 training aircraft used for multi-service pilot training.

It's difficult to overstate the importance of an award like this for V2X at this time, as it should significantly boost growth beyond what the company has already been accomplishing—the financial impact of the T-6 award will not reach the company until 2026 as well, so the recent developments are entirely separate from this project.

Share Repurchase Plan and Acquisition

Besides its recent financial performance and contracts, at least two other developments may catalyze growth for V2X. First, the company recently announced a $100 million share repurchase authorization. Using its cash reserves, this initiative is a strategic one to deploy capital and boost shareholder value.

Second, the company announced its plans to acquire an unnamed specialized data engineering, intel mission support, and cyber solutions business in mid-August. Increasing V2X's reach into the cyber domain will boost its value to intelligence clients, opening up new avenues for future contracts.

Though the acquisition is relatively small—it is valued at roughly $24 million—it could be the first of many such developments. V2X executives have discussed the importance of an acquisition-friendly strategy to boost the company's offerings and expand its reach.

Both of the above demonstrate V2X's proactive approach to utilizing its capital to both increase appeal and value for shareholders while also continuing to grow the business.

Nine out of 12 analysts see VVX shares as a Buy, and despite the fact that the stock is up nearly 34% in the last month, it still has room for additional upside based on a consensus price estimate of $63.36. With analysts expecting another 15% of earnings growth in the next year, investors may have plenty of reasons to be bullish on this under-the-radar defense sector play.