By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Wealth Beat NewsWealth Beat News
  • Home
  • News
  • Finance
  • Investing
  • Banks
  • Mortgage
  • Loans
  • Credit Cards
  • Small Business
  • Dept Management
Notification Show More
Aa
Wealth Beat NewsWealth Beat News
Aa
  • News
  • Finance
  • Investing
  • Banks
  • Mortgage
  • Loans
  • Credit Cards
  • Small Business
  • Dept Management
Follow US
Wealth Beat News > News > Redwire Stock Is On Track To Become Profitable (NYSE:RDW)
News

Redwire Stock Is On Track To Become Profitable (NYSE:RDW)

News
Last updated: 2023/05/26 at 10:40 AM
By News
Share
9 Min Read
SHARE

Contents
Investment thesisShort space overviewResults & financialsWhen is profitability reached?ValuationRisksShare dilution and insider sellingConclusion

Investment thesis

Redwire (NYSE:RDW) is an exciting space sector company whose revenue and cost development suggest that it could reach profitability within the next few years. However, the company will soon run out of money, and already in the past, there was a slow dilution in the outstanding shares. In addition, the stock is very volatile; therefore, I continue to watch it for now, as I am currently very cautious with unprofitable companies.

Short space overview

Redwire Corporation is an innovative player in the rapidly growing space infrastructure sector. This includes solar power generation, space-based biotechnology, and other essential technologies needed for missions in space. In recent years, private companies have increasingly participated in the industry due to technological advances and evolving regulatory frameworks. This new wave of private participation signals the industry’s growth trajectory, but it also intensifies competition and places emphasis on innovation and cost efficiency.

Revenues by Customer Type

Investor presentation

The developing division of the world into East and West will not stop at space. The more Russia, China, and other nations build up here, the more the West will have to do likewise. Space, including satellites, are essential for the defense of a country; probably we will see a new space race in the following decades.

But not only for this but also for science and new technologies, space is becoming increasingly important. There are some materials that can only be produced in this environment of lower gravity. In addition, research is already being conducted on plants that are adapted to the environment and can therefore be grown outside the Earth. Another possibility is to produce solar energy in space and send it back to Earth by a concentrated beam. Sounds like science fiction, but much of what used to sound like that is now reality.

Results & financials

In the following section, I would like to look at the company’s development and ask whether the company is on a good path to achieving profitability. To do this, we will look at various graphs. First, a short overview of the general sales and cost development, and the net income of the trailing twelve months.

Chart
Data by YCharts

The following overview refers to the last 12 months compared to the 12 months before. Here we can see several interesting things. Firstly, it is positive that revenue has increased by 33%, but the cost of revenue has increased by almost the same percentage, resulting in a rather low gross profit margin overall. However, the company has reduced its operating costs by 24%, which is quite a lot for only one year. I was surprised by the rather low costs for research and development.

RDW Overview

Manuel Paul Dipold

Furthermore, the operating income would be only slightly negative, but the net income suddenly stands at a $120M loss. What happened here? On the cash flow statement, we find the cause, namely that there were significant costs for depreciation and restructuring in mid-2022.

RDW cashflow

Seeking Alpha

If we look at the same graph as above, but this time per quarter and not for the trailing twelve months, we see that net income has been developing positively for several quarters.

Chart
Data by YCharts

When is profitability reached?

The following chart shows positive developments: the revenue per share is increasing, and the EPS tends to get less negative.

Chart
Data by YCharts

In the Q1 2023 results, the word profitability appears once, but unspecifically. I assume it will take several more years of good business development before the company becomes sustainably profitable. Of course, this depends on many factors, such as the future order intake and how quickly the company manages to process it, i.e., whether the company can find and retain the necessary staff.

We have started 2023 off with both record revenue and positive Adjusted EBITDA,” stated Peter Cannito, Chairman and Chief Executive Officer of Redwire. “Our strategy of providing proven space heritage products in the present combined with technical innovation for the future is on track for achieving profitability and delivering significant momentum as we continue to execute our 2023 plan.

Q1 2023

However, the company sees itself on a good path and describes Q1 2023 in the Investor Presentation as the most successful quarter ever.

RDW Q1 2023

Investor presentation

Valuation

The company is currently valued at an enterprise value of $320 million. The market cap is $161 million, and the total debt is $94 million. The question of valuation is always tricky with unprofitable companies. The market capitalization seems low, considering this year’s sales of about $250M. If the company reaches profitability in the next few years, the current debt should not be a problem. However, it should be noted that the company has only $11M cash left, which means new shares will soon be issued or new debt will probably be raised. The interest burden was about $8M in the last 12 months, which is relatively low, given the revenue.

Risks

Investing in Redwire involves several risks. First and foremost, the space industry is inherently high-risk due to the complexities of space missions, regulatory hurdles, and the capital required for research and development.

I also noticed that the order backlog is $287M, but at the end of the last quarter, it was $313M. So overall, the company depends on these external orders, which have little to do with the general economic development but are probably cyclical in their own way. Also, emerging competition is possible, which would lower margins.

Another risk is the fact that several of the company’s orders were related to the International Space Station (ISS). However, the ISS is scheduled to reach the end of its life in 2031, and as far as I know, no successor has yet been announced. However, until then, there is still some time, and the fact that China now operates its own space station will tempt the Western world not to remain inactive here.

Share dilution and insider selling

In September 2021 was the IPO. Since then, there has been a slight increase of about 1.5M shares. SBCs are rather small compared to many other companies.

Chart
Data by YCharts

These are all insider trades since the beginning of December 2022. The most recent sales all occurred after the publication of the Q1 figures, but overall nothing spectacular.

RDW insider trades

openinsider

Conclusion

Overall, the company seems to be on a good track. Profitability could be achieved with further positive business development in the next few years. Debt, interest charges, and SBCs are not excessively high. And without stating concrete numbers, I think we can say that space and its economic development could become one of the big topics of this century. Of course, one must be careful here. The share is highly volatile and has been trading sideways for some time. I will continue to observe the share, but not yet buy. However, it always depends on the own composition of the portfolio, that is, a healthy mix of risk values and value. At the moment, I am rather cautious about risk. Suppose the company becomes a long-term winner and profitable. In that case, there will still be many entry opportunities, even if one then does not buy at the low point; but to buy during an upward movement is something I prefer anyway.

Read the full article here

News May 26, 2023 May 26, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Fast Four Quiz: Precision Medicine in Cancer

How much do you know about precision medicine in cancer? Test your knowledge with this quick quiz.
Get Started
Excelerate Energy: Nearby Best Energy-Source Cap-Gain Prospect (NYSE:EE)

The primary focus of this article is Excelerate Energy, Inc. (NYSE:EE). Investment…

Penske Is Steady, But The Road Ahead May Be Bumpy (NYSE:PAG)

Investing Thesis On Wednesday, Penske Automotive Group (NYSE:PAG) released a superficially encouraging…

Top Financial – No, Stop It, This Is Silly (NASDAQ:TOP)

TOP Financial Moves, yes, but why? TOP Financial (NASDAQ:TOP) was quite the…

You Might Also Like

News

St. James Investment Company Investment Adviser’s Q2 2025 Letter

By News
News

Delta Air Lines, Conagra Brands Set To Report Earnings As Markets Await Consumer Credit

By News
News

5 Relatively Secure And Cheap Dividend Stocks, Yields Up To 9% (July 2025)

By News
News

Webster Financial Stock: A Bit More Upside Is Warranted (NYSE:WBS)

By News
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Contact US
More Info
  • Newsletter
  • Finance
  • Investing
  • Small Business
  • Dept Management

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions

Join Community

2025 © wealthbeatnews.com. All Rights Reserved.

Join Us!

Subscribe to our newsletter and never miss our latest news, podcasts etc.

I have read and agree to the terms & conditions
Zero spam, Unsubscribe at any time.
Welcome Back!

Sign in to your account

Lost your password?