Space industry leader SpaceX is reportedly shopping around a private auction of some of its employee shares at a $350 billion company valuation. Shares of Rocket Lab USA (NASDAQ: RKLB) look like actual rockets, after all, up 370% over the last 52 weeks. Spy satellite operators Planet Labs (NYSE: PL) and Spire Global (NYSE: SPIR) aren't looking too shabby either, with gains of 65% and 92%, respectively.
If you ask me, though, perhaps the ultimate best buy an investor in the space industry could make right now isn't any of these companies. Instead, it's Intuitive Machines (LUNR -3.59%), a tiny company almost no one ever heard of before earlier this year, when "LUNR" lived up to its name... and landed a spaceship on the moon.
A giant leap for a really small company
Intuitive Machines stock wasn't worth a lot before this happened. After its 2023 IPO, Intuitive stock cost as much as $40 a share, meaning a $1,000 investment would have netted you only about 25 shares. The stock quickly gave up its gains, however, and soon plummeted from its IPO price. In the months leading up to its successful placement of a Nova-C lander on the moon, in fact, Intuitive stock mostly bounced around the $2-a-share level.
Today, the stock still costs less than $12, and $1,000 will buy you more than 80 shares.
So what changed?
Well after landing on the moon, Intuitive won a fourth NASA contract to deliver lunar cargo. Fast forward one more month, and Intuitive stock soared 60% in a single day when against all odds, it won a much bigger NASA contract (like, $4.8 billion big) to go beyond delivering parcels to the moon, to building an entire communications system between the Earth and moon.
Clearly, this stock is going places.
A bigger question for investors, though, is whether Intuitive Machines' many successes this year have already been priced in -- or whether Intuitive stock still has room to rise.
Valuing Intuitive Machines stock
So will Intuitive stock keep going up? Is it, in short, a buy? That really depends on how the future plays out.
Despite all the positive PR, Intuitive stock today really isn't much to look at. Trailing-12-month sales are just $204 million, according to data from S&P Global Market Intelligence, giving Intuitive a pricey 5.3 times sales valuation. Earnings over the past year are negative -- $176.4 million. And the company is burning about $85 million a year in cash -- an amount roughly equal to what Intuitive has in the bank right now.
To have any chance of justifying the stock's $1 billion-plus market capitalization, you really have to look a few years out in the future to where analysts expect the company to be in, say, 2026.
According to S&P forecasts, 2026 is the year Intuitive Machines stock will finally turn profitable, earning about $0.22 per share on sales of just under $500 million. Valuation-wise, that puts the stock at about a 2 times annual sales (albeit sales two years distant) valuation.
Granted, the stock's very forward P/E ratio would be a pricey 53.5 that year. But with sales rising nearly 50% between 2024 and 2026, and earnings rising even faster, that high price would seem to be justified by an equally high growth rate.
Image source: Getty Images.
It's time to buy Intuitive Machines stock
Indeed, if Intuitive Machines' $4.8 billion NASA Near Space Network contract plays out as envisioned, the stock could be growing even faster than analysts currently project. As Intuitive explained in its original press release describing it, the contract envisions work covering an initial five-year time span, with an optional five-year period extension to follow. If exercised in full, the contract would be worth $4.8 billion over 10 years -- so $480 million per year.
By the way, $480 million a year is nearly as much as Wall Street currently forecasts for Intuitive's entire 2026 revenue. It's actually more than current forecasts for 2027 revenue. And that's not even counting the more than $200 million a year Intuitive is already bringing in from its cargo runs to the moon.
Long story short, current Wall Street estimates vastly understate the potential revenue growth at this company over the next few years, and probably underestimate the company's potential earnings by a similarly vast amount. While we'll need to see how the Near Space Network contract plays out in practice to know how profitable it ends up being, my very strong hunch is that this company's going to be a whole lot more profitable than the analysts currently give it credit for.
The best time to buy Intuitive Machines is right now, before Wall Street figures that out.
