Electro Optic Systems Holdings Ltd (ASX: EOS) shares are pushing higher on Tuesday.
At the time of writing, the ASX defence stock is up 5% to $10.85.
Why is this ASX defence stock rising?
Investors have been buying the defence technology company’s shares after it released a strong fourth quarter update that highlighted accelerating activity levels, a sharply higher order book, and improving cash flow.
According to the release, EOS reported cash receipts from customers totalling $77.3 million. This represents an increase of $60.8 million compared to the third quarter of 2025.
Management notes that this increase primarily reflects milestone completions achieved on customer contracts during the quarter.
The good news is there should be more to come in 2026. The ASX defence stock notes that as of 31 December, its order contract backlog was $459 million. This is an increase of $323 million on the position at the start of the year.
What else happened during the quarter?
EOS advised that during the quarter, it continued the manufacture and delivery of remote weapon systems (RWS) for customers in the United States, Europe, the Middle East, South East Asia, and Australia.
Activity levels during the three months were higher than in previous quarters due to the timing of customer orders and delivery schedules.
It also advised that during the quarter, the ASX defence stock relocated its business activity in Singapore to a new facility. The facility includes a new RWS service and support centre and a High Energy Laser Weapon manufacturing facility.
In addition, its EOS Space Systems business continued to deliver on the backlog of contracts with the Australian Defence Force (ADF) and Commonwealth of Australia.
Strong balance sheet
EOS’ net cash inflow from operating activities for the quarter was $19.3 million. This compares favourably to a net cash outflow of $34.3 million in the third quarter.
At the end of the quarter, the ASX defence stock had total cash holdings of $106.9 million. This represents a $15.4 million increase from its total cash holdings at the end of September.
In addition, the company has a further $41.6 million of cash security deposits held with banks to support bank guarantees and bonds.
Following today’s gain, the EOS share price is now up almost 800% since this time last year. To put that into context, a $5,000 investment would now be worth approximately $45,000.
The post This ASX defence stock is racing higher on sales surge appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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