Macroeconomic uncertainty, evolving trade policies, inflation and supply-chain dynamics could impact the Zacks Satellite and Communication industry’s outlook. Additionally, high capital spending and extended return-on-investment cycles may strain the profitability of existing players and discourage new entrants. Spectrum allocation, orbital congestion and regulatory approvals remain key risks.

Nonetheless, the industry is undergoing a transformative phase, driven by the convergence of rapid technological progress and higher global connectivity requirements. Increasing interest in space-based infrastructure drives the industry's prospects. The expansion of the Internet in remote areas through emerging low Earth orbit (“LEO”) constellations, such as Starlink and OneWeb, is driving demand for satellite broadband services. AI, Machine Learning and Big Data have given rise to multiple use cases across industries such as oil and gas, agriculture, transportation and non-governmental organizations.

Globalstar (GSAT Quick QuoteGSAT - Free Report) , Iridium Communications (IRDM Quick QuoteIRDM - Free Report) and Gilat Satellite Networks (GILT Quick QuoteGILT - Free Report) have significant growth potential amid simmering geopolitical tensions, surging defense budgets and demand for high-quality imagery and value-added services. 

Industry Description

The Zacks Satellite and Communication industry includes space technology companies that offer satellite imagery, intelligence services and spacecraft and robotics for space exploration, research and national security. They assist customers in understanding and navigating the changing planet, provide global broadband communications and explore space. These companies deliver communication services to media businesses, fixed and wireless telecommunications providers, data networking companies and Internet service providers. They also supply commercial satellite communication services to government and military entities.  Additionally, the firms offer satellite-based consulting and technical services, covering the entire satellite lifecycle and infrastructure, from satellite and launch vehicle procurement to telemetry and commanding services.

What's Shaping the Industry's Future?

Spending on Space Infrastructure Could Be Affected by Macroeconomic Weakness: With more than half of revenues from government customers, the industry will likely benefit from increasing defense and space infrastructure budgets amid simmering geopolitical tensions. The explosion of space-based intelligence, surveillance, and reconnaissance and communications is expected to boost government investments in the sector. 

However, weakness in global macroeconomic conditions amid tariff troubles could compel customers to lower spending, which does not bode well for industry participants. Volatile supply-chain dynamics and inflation could lead to higher costs and increased lead time, which are major concerns. Also, competition from fiber optics and terrestrial networks, in certain regions, could deter the growth of the industry participants, as these may offer relatively lower-cost and higher-speed alternatives.

Advancements in Technology Hold the Key: Rapid technological advancement is the primary catalyst driving the industry’s growth trajectory. Integration of space-based networks with terrestrial telecom networks, as well as cloud computing and AI, marks a new phase of growth. The integration of Geosynchronous Equatorial Orbit (“GEO”) and LEO constellations with terrestrial networks is enabling trade-offs between coverage, latency and capacity. Direct-to-device (“D2D”) and non-terrestrial networks (“NTN”) are extending satellite connectivity directly to smartphones and IoT endpoints. Reusable rockets, mass-produced satellites and low-cost launch systems are significantly improving prospects for the participants.

A mass-produced system is adopted and several satellites are manufactured in an assembly line. Integration and testing have become highly automated. The extent of testing is lowered after prototyping and initial production is completed. Countries with comprehensive space programs have distinct military, economic and scientific advantages. However, complexity and barriers to entry into space have allowed only a few to develop notable capabilities. The demand for small satellites across regions is expected to increase over time. North America has the bulk of the market share, followed by the Asia Pacific, Europe and the rest of the world. North America maintains its dominance with the highest number of small satellite launches by government end users. The companies continue to align their products and services with the needs of the U.S. Department of Defense’s National Defense Strategy and the growing demand for international defense and intelligence.

Subscriber Momentum to Drive Growth: Wide proliferation and cheaper access to space technology have led to diverse end-market users. The companies share a strategic relationship with various government organizations, including military and disaster response agencies and non-governmental organizations, to provide robust, tactical, real-time voice and low-latency data command and control communications. A comprehensive product portfolio enables companies to expand their customer base and offset the losses from one product category with the benefits from another.

High product quality increases brand loyalty and enhances performance in a competitive market. For civil customers, notably NASA, growth is being driven by space exploration programs. For commercial customers, growth drivers include a strong demand for imagery due to new use cases, space-based remote sensing, GEO replacement demand and LEO communications programs. Advanced mobile networks need strong backhaul and global infrastructure, increasing reliance on satellite support for rural and oceanic coverage. 

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Satellite and Communication industry is housed within the broader Zacks Computer and Technology sector. It currently has a Zacks Industry Rank #212, which places it in the bottom 11% of more than 243 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few satellite and communication stocks you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.

Industry Outperforms the Sector and the S&P 500

In the past year, the Zacks Satellite and Communication industry outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector.

The industry has gained 234.9% over this period compared with the S&P 500’s return of 18.1%. The broader sector has moved up 25.6%.

One-Year Price Performance

 

Industry's Current Valuation

The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is commonly used for satellite and communication stocks. The industry has a trailing 12-month EV/EBITDA of 4.5X compared with the S&P 500’s 18.94X. The sector’s trailing 12-month EV/EBITDA stands at 19.61X.

In the past five years, the industry has traded as high as 29.89X and as low as 3.15X, with a median of 18.34X, as the chart below shows.

 

3 Stocks to Add to the Watchlist

Globalstar: GSAT operates a LEO satellite constellation infrastructure to deliver mobile satellite services (“MSS”) and voice and data communications services to customers across various sectors, including retail, business and governments. The company’s terrestrial spectrum consists of Band 53 and its 5G variant, n53 and XCOM RAN.

Globalstar is benefiting from continued growth in wholesale capacity services and commercial IoT revenues (mainly due to gross activations), as well as growing traction in the government, especially U.S. federal agencies and defense markets.

The company is in the midst of a comprehensive infrastructure upgrade and has launched its global ground infrastructure program for the next-generation Extended MSS Network, or the C-3 system. Under this program, it will add about 90 antennas across 35 ground stations in 25 countries, significantly boosting network capacity and resiliency. Globalstar recently added that it is installing three new six-meter C-3 tracking antennas at the ground station in Yeo Ju, South Korea.

GSAT is advancing new innovative platforms, such as the RM200 two-way commercial IoT module (now globally available) and XCOM RAN, which could drive the top line further. The RM200M module is the first satellite module to feature integrated GNSS, Bluetooth, an accelerometer and an application processor, enabling advanced two-way communication. It is witnessing growing traction across verticals such as oil & gas, defense and MVNOs. With XCOM RAN, GSAT is eyeing entry into terrestrial wireless markets, significantly broadening its total addressable market.

Though management expects XCOM RAN to have material long-term upside, the current substantial investments are weighing on adjusted EBITDA performance.  Macro uncertainty and stiff competition from other players remain overhangs. Also, new product rollouts entail execution risks. Delays in client onboarding, technical troubles or slower commercialization could weigh on revenue growth.

GSAT currently carries a Zacks Rank #3 (Hold). The earnings estimate for 2025 is pegged at a loss of 4 cents per share, unchanged over the past seven days. The stock has skyrocketed 125.2% over the past year.  

 You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Price and Consensus: GSAT

Iridium Communications: Headquartered in McLean, VA, Iridium operates one of the largest commercial constellations with a mesh architecture of 66 operational LEO satellites to route traffic using radio frequency crosslinks. The architecture provides strong performance by minimizing the need for ground infrastructure.

Iridium continues to deliver growth across key segments like commercial IoT, voice and data, and the government segment. IRDM’s new business line, known as Iridium Satellite Time and Location (“STL”), is a Positioning, Navigation and Timing (“PNT”) service that offers a resilient alternative to GPS and other GNSS systems, which can be vulnerable to jamming or spoofing.  Iridium is also developing a quantum-safe cybersecurity solution using its PNT signal to enhance identity verification and authentication, targeting a share of the $20 billion identity verification market.

Management is focused on developing several services, including D2D (Iridium NTN Direct), IoT (Iridium Certus IoT products) and satellite-based personal communication devices in addition to STL. Iridium’s 25-year relationship with the U.S. Department of Defense is a significant moat. The company continues to secure new DoD contracts and expects $108 million in revenues for 2025 from government business.

For 2025, the company has lowered its full-year service revenue growth forecast to around 3% from 3-5% guided earlier. The outlook is impacted by the delayed timing of PNT revenues. A major customer’s significant PNT deployment, while promising, depends on factors beyond its control. As a result, hosted payload and data service growth will be below trend in the fourth quarter, with full-year service revenues likely at the lower end of its prior guidance. The company is also narrowing its OEBITDA guidance to $495-$500 million, at the upper end of the prior range ($490-$500 million).

IRDM currently carries a Zacks Rank #3. The earnings estimate for 2025 is pegged at $1.04 per share, unchanged over the past 60 days. The stock has lost 30% in the past year.  

Price and Consensus: IRDM

Gilat Satellite Networks: Based in Petah Tikva, Israel, Gilat is a provider of satellite-based broadband services, including designing and manufacturing advanced equipment and innovative technology. Gilat’s solutions support a range of applications, including broadband access, cellular backhaul, enterprise services, in-flight connectivity (“IFC”), maritime, trains, defense and public safety, all while meeting high service standards.

Strength in the defense sector bodes well for Gilat as demand for defense SATCOM solutions grows due to geopolitical dynamics. The integrated capabilities of Gilat DataPath, Wavestream and Stellar Blu enable end-to-end SATCOM solutions for defense operations across land, air and mobile operations.

GILT’s Commercial segment is gaining from momentum in next-generation platforms and execution across key programs. As operators move toward multi-orbit ground networks, GILT noted that its SkyEdge IV platform sits at the center of this transformation. SkyEdge IV offers scalability and advanced network management through its virtualized software-defined ground infrastructure. The IFC business is expanding steadily, backed by strong customer engagement and execution. A major highlight is the ramp-up of Gilat Stellar Blu and its Sidewinder electronically steered array product.

Gilat is actively integrating AI into its Network Management System, enabling greater automation, predictive insights and operational efficiency for satellite operators.

Global macroeconomic uncertainty and changing international trade policies and tariffs are negatively impacting its business environment.

GILT currently carries a Zacks Rank #3. The earnings estimate for 2025 is pegged at 58 cents per share, unchanged over the past 60 days. The stock has risen 168.5% in the past year.  

Price and Consensus: GILT