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Intuitive Machines Stock Surges 180% Year to Date: Should You Buy Now?
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Intuitive Machines, Inc.’s (LUNR - Free Report) shares have surged a massive 179.9% in the year-to-date period, in contrast to the Zacks Aerospace-Defense industry’s fall of 2.5%. It has also outperformed the broader Zacks Aerospace sector’s rise of 4.8%. It also outpaced the S&P 500’s surge of 20% in the same period. LUNR rides on its well-established position as a provider of lunar space products and services, along with the growing program funding from the U.S. government for space exploration.
Other defense players such as Leidos Holdings (LDOS - Free Report) , TransDigm Group (TDG - Free Report) and Lockheed Martin (LMT - Free Report) have also delivered a stellar performance, with their shares surging 52.6%, 40.3% and 33.7%, respectively, year to date.
LUNR Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
With LUNR riding high, investors interested in space stocks may consider adding it to their portfolio. However, before making any hasty decision, it would be prudent to take a look at the reasons behind the surge, the stock’s growth prospects as well as risks (if any) to investing in the same. The idea is to help investors make a more insightful decision.
What Pushed LUNR Stock Up?
Intuitive Machines gains from the expanding commercial lunar economy by leveraging its expertise in manufacturing space products and services to support sustained robotic and human exploration to the moon.
Notably, in February 2024, LUNR’s Nova-C lander became the first U.S. vehicle to land softly on the lunar surface since 1972 and was the first object in human history to land on the South Pole. In April 2024, NASA awarded a $30 million contract, making LUNR a prime contractor to complete a Lunar Terrain Vehicle Services Feasibility Assessment. This contract marked Intuitive Machine’s entry into human spaceflight operations within NASA’s $4.6 billion LTV Services project. These demonstrate the achievements of LUNR in capitalizing on the growth opportunities of the expanding commercial lunar economy, which, in turn, must have boosted its share price so far this year.
The U.S. government continues to boost funds for space exploration programs, as evident from the fiscal 2024 President’s budget that included $24.9 billion for NASA’s Space Exploration. Public-private partnerships, such as NASA’s commercial lunar payload contract program, have also been boosting LUNR’s operating results and thereby investors’ confidence in the stock. Impressively, in the second quarter of 2024, the company registered a solid 130.1% year-over-year growth in its top line.
Is LUNR Stock’s Growth Sustainable?
Intuitive Machines’ growth prospects in the space exploration industry remain solid, considering the immense investments, both by the U.S. government and private companies. To this end, it is imperative to mention that the fiscal 2025 U.S. budget included $7.8 billion for the Artemis campaign, which aims at taking astronauts to the lunar surface as part of a long-term journey of science and exploration.
Such huge funding must have been encouraging companies like LUNR to innovate more advanced lunar infrastructural products. Evidently, LUNR’s largest lander, the Nova-M, is currently under development and is expected to carry approximately 5,000-7,500 kilograms of payload to the lunar surface. Once this product comes to market, we may expect LUNR to generate revenues from it.
Moreover, the company ended the second quarter of 2024 with a solid backlog of $213 million, while in September 2024, it won the Near Space Network contract worth $4.82 billion for conducting communication and navigation services in the near space region from NASA. These are indicative of solid revenue generation prospects for Intuitive Machines.
A sneak peek at its near-term sales estimates mirrors a similar picture.
Upbeat Sales Estimates for LUNR
The Zacks Consensus Estimate for LUNR’s third-quarter revenues implies a solid improvement of 311.4% from the prior-year quarter’s level, while that for 2024 indicates an 181.5% rise year over year.
The estimated figure for 2025 also indicates a similar picture.
Image Source: Zacks Investment Research
LUNR’s Strong Prospects Justify the Stock’s Premium Valuation
LUNR stock is not very cheap, as its Value Score of D suggests a stretched valuation at this moment.
In terms of valuation, LUNR’s forward 12-month price-to-sales (P/S) is 3.11X, a premium to its peer group’s average of 2.39X. This suggests that investors will be paying a higher price than the company's expected earnings growth compared to that of its peers.
LUNR’s Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Nevertheless, we believe the strong growth prospect justifies Intuitive Machine’s premium valuation.
Risks to Consider Before Selecting LUNR
Despite the aforementioned growth opportunities, there are certain challenges that LUNR faces currently and one should consider them before investing in the stock. One such challenge is the high operating expenses that the company incurs as it consistently makes investments in upgrading its lunar landers and other space products. Such high operating expenses tend to adversely impact the company’s bottom line, a trend we expect to witness in the near term as well.
A sneak peek at its near-term earnings estimates suggests a poor performance.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share has moved south by 23.3% and 14.3%, respectively, over the past 60 days. Such a downward revision in earnings estimates indicates analysts’ deteriorating confidence in the stock’s bottom-line growth.
LUNR’s Dismal Earnings Estimates
Image Source: Zacks Investment Research
Moreover, the company is still in the preliminary stages of developing its full space infrastructure. If it fails to demonstrate the reliability of its products and services through a successful lunar landing or gets delayed in completing specific space missions timely, its results of operations might get hurt.
To Conclude
Investors may consider adding LUNR stock to their portfolio, considering its robust share price performance, solid revenue growth prospects, strong backlog and solid liquidity evident from the massive 603% improvement witnessed in its cash balance as of June 30, 2024.
The company’s current Zacks Rank #2 (Buy) further supports our thesis.
Image: Bigstock
Intuitive Machines Stock Surges 180% Year to Date: Should You Buy Now?
Intuitive Machines, Inc.’s (LUNR - Free Report) shares have surged a massive 179.9% in the year-to-date period, in contrast to the Zacks Aerospace-Defense industry’s fall of 2.5%. It has also outperformed the broader Zacks Aerospace sector’s rise of 4.8%. It also outpaced the S&P 500’s surge of 20% in the same period. LUNR rides on its well-established position as a provider of lunar space products and services, along with the growing program funding from the U.S. government for space exploration.
Other defense players such as Leidos Holdings (LDOS - Free Report) , TransDigm Group (TDG - Free Report) and Lockheed Martin (LMT - Free Report) have also delivered a stellar performance, with their shares surging 52.6%, 40.3% and 33.7%, respectively, year to date.
LUNR Outperforms Industry, Sector & S&P 500
With LUNR riding high, investors interested in space stocks may consider adding it to their portfolio. However, before making any hasty decision, it would be prudent to take a look at the reasons behind the surge, the stock’s growth prospects as well as risks (if any) to investing in the same. The idea is to help investors make a more insightful decision.
What Pushed LUNR Stock Up?
Intuitive Machines gains from the expanding commercial lunar economy by leveraging its expertise in manufacturing space products and services to support sustained robotic and human exploration to the moon.
Notably, in February 2024, LUNR’s Nova-C lander became the first U.S. vehicle to land softly on the lunar surface since 1972 and was the first object in human history to land on the South Pole. In April 2024, NASA awarded a $30 million contract, making LUNR a prime contractor to complete a Lunar Terrain Vehicle Services Feasibility Assessment. This contract marked Intuitive Machine’s entry into human spaceflight operations within NASA’s $4.6 billion LTV Services project. These demonstrate the achievements of LUNR in capitalizing on the growth opportunities of the expanding commercial lunar economy, which, in turn, must have boosted its share price so far this year.
The U.S. government continues to boost funds for space exploration programs, as evident from the fiscal 2024 President’s budget that included $24.9 billion for NASA’s Space Exploration. Public-private partnerships, such as NASA’s commercial lunar payload contract program, have also been boosting LUNR’s operating results and thereby investors’ confidence in the stock. Impressively, in the second quarter of 2024, the company registered a solid 130.1% year-over-year growth in its top line.
Is LUNR Stock’s Growth Sustainable?
Intuitive Machines’ growth prospects in the space exploration industry remain solid, considering the immense investments, both by the U.S. government and private companies. To this end, it is imperative to mention that the fiscal 2025 U.S. budget included $7.8 billion for the Artemis campaign, which aims at taking astronauts to the lunar surface as part of a long-term journey of science and exploration.
Such huge funding must have been encouraging companies like LUNR to innovate more advanced lunar infrastructural products. Evidently, LUNR’s largest lander, the Nova-M, is currently under development and is expected to carry approximately 5,000-7,500 kilograms of payload to the lunar surface. Once this product comes to market, we may expect LUNR to generate revenues from it.
Moreover, the company ended the second quarter of 2024 with a solid backlog of $213 million, while in September 2024, it won the Near Space Network contract worth $4.82 billion for conducting communication and navigation services in the near space region from NASA. These are indicative of solid revenue generation prospects for Intuitive Machines.
A sneak peek at its near-term sales estimates mirrors a similar picture.
Upbeat Sales Estimates for LUNR
The Zacks Consensus Estimate for LUNR’s third-quarter revenues implies a solid improvement of 311.4% from the prior-year quarter’s level, while that for 2024 indicates an 181.5% rise year over year.
The estimated figure for 2025 also indicates a similar picture.
LUNR’s Strong Prospects Justify the Stock’s Premium Valuation
LUNR stock is not very cheap, as its Value Score of D suggests a stretched valuation at this moment.
In terms of valuation, LUNR’s forward 12-month price-to-sales (P/S) is 3.11X, a premium to its peer group’s average of 2.39X. This suggests that investors will be paying a higher price than the company's expected earnings growth compared to that of its peers.
LUNR’s Price/Sales Ratio (F12M)
Nevertheless, we believe the strong growth prospect justifies Intuitive Machine’s premium valuation.
Risks to Consider Before Selecting LUNR
Despite the aforementioned growth opportunities, there are certain challenges that LUNR faces currently and one should consider them before investing in the stock. One such challenge is the high operating expenses that the company incurs as it consistently makes investments in upgrading its lunar landers and other space products. Such high operating expenses tend to adversely impact the company’s bottom line, a trend we expect to witness in the near term as well.
A sneak peek at its near-term earnings estimates suggests a poor performance.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share has moved south by 23.3% and 14.3%, respectively, over the past 60 days. Such a downward revision in earnings estimates indicates analysts’ deteriorating confidence in the stock’s bottom-line growth.
LUNR’s Dismal Earnings Estimates
Moreover, the company is still in the preliminary stages of developing its full space infrastructure. If it fails to demonstrate the reliability of its products and services through a successful lunar landing or gets delayed in completing specific space missions timely, its results of operations might get hurt.
To Conclude
Investors may consider adding LUNR stock to their portfolio, considering its robust share price performance, solid revenue growth prospects, strong backlog and solid liquidity evident from the massive 603% improvement witnessed in its cash balance as of June 30, 2024.
The company’s current Zacks Rank #2 (Buy) further supports our thesis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.