When most investors think about the new space economy, they aren’t usually thinking about the FTSE 100. Instead, it’s mostly about SpaceX, Rocket Lab, and Planet Labs.
But tucked quietly inside the UK’s flagship index is a world-class aerospace engineer that’s building critical components for the satellites, engines, and aircraft shaping the future of low Earth orbit.
That company is Melrose Industries (LSE:MRO).
The FTSE 100’s space economy play
Melrose is one of the world’s largest aerostructures and engines businesses, supplying precision-engineered components to virtually every major aircraft and aerospace programme on the planet.
This includes wing structures for Airbus jets, engine nacelles for wide-body aircraft and, crucially, components for the Eurofighter Typhoon and a growing pipeline of LEO satellite and space infrastructure programmes.
And its full year results for 2025 confirmed the business is gaining impressive momentum. Total revenue grew 8% to £3.59bn, with underlying operating profit climbing 23% to £647m. Digging deeper, higher-margin, engine-related revenues rose 15% to £1.63bn, driven by surging demand for aftermarket services and defence contracts.
Skip ahead to the first quarter of 2026, the top line expanded by an even faster 11%, with management reiterating its full-year guidance of £700m-£750m in operating earnings. And yet, despite all this financial momentum, the share price has seemingly lagged, with most investors overlooking the firm’s achievements.
Is this a hidden buying opportunity? Or is there something else going on?
What’s giving investors pause?
Sentiment surrounding Melrose shares has soured of late, mostly because of a chemical spill scare in May. A thermal overheating failure at its Garden Grove facility in California triggered an evacuation of around 50,000 local residents. Luckily, the situation was contained, and no catastrophic leak or explosion occurred.
But unsurprisingly, a class action lawsuit has now been filed with an ongoing investigation into the event. These legal hurdles could add near-term financial pressure to margins, especially given its likely Melrose will opt to settle the lawsuit instead of battling it out in court for many years.
However, the more concerning damage is likely to be to its reputation. Even if the business is found to be entirely fault-free and this was just rotten luck, the subsequent disruptions to orders could push customers into the arms of rival suppliers – a real risk worth watching closely.
A risk worth taking?
The Garden Grove incident has sent Melrose shares firmly in the wrong direction. But all things considered, I think the market may have overreacted.
The situation definitely needs to be taken seriously, and there’s the risk that Melrose subsequently misses its full-year targets due to the disruption. Yet with the stock already trading at a cheap valuation even before this chaos, it’s hard not to see the recent sell-off as a long-term buying opportunity.
That’s why I’ve already added Melrose to my own portfolio. And for investors looking for a discounted opportunity to tap into the frontier space economy, this FTSE 100 stock could be worth mulling.
Should you invest £5,000 in Melrose Industries Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Melrose Industries Plc made the list?
Zaven Boyrazian owns shares in Melrose Industries.
