Order Backlog: The Game-Changing Metric for Investors Looking to Get Ahead
How Savvy Investors Use This Metric to Make Smart Investment Decisions
Even if the final and most accurate information about a stock may be found in its financial reports, you can still take a step back and identify signals that lead to those results before they appear in a statement. That’s how I prefer to operate.
There is a lot of literature on non-financial indicators that lead to a company’s success. I covered some of them in previous articles (brand value or company culture for example).
In this post, I want to draw your attention to an indicator of future sales that is often overlooked in investing communities/forums/blogs and deserves more attention in my opinion: Order Backlog.
What is order backlog?
A backlog is the total sale value of all customer orders received but not yet shipped and is a significant leading indicator of future sales and earnings. A backlog exists when a company’s production capacity is lower than the rate at which orders are received. A growing backlog suggests a significant order book that will eventually result in future sales or a loss in manufacturing capacity. A diminishing backlog means that sales will eventually…
