Space as an investment theme is gaining traction, with private investment in space companies hitting a record last year. Space infrastructure companies received $14.5 billion of private investment last year, up more than 50% from 2020. Moreover, last year saw record investment ($17.10 billion) by venture capital firms in space-related companies. There has been a total equity investment of $252.90 billion across 1,694 unique space infrastructure companies over the last ten years.
In addition, the space industry is projected to generate a cumulative revenue of over $1.25 trillion by 2030, growing at a CAGR of 6.3%. The space ecosystem is expanding rapidly, with significant research and development in this space and the fast-advancing commercial segment.
Given this solid backdrop, space stocks Trimble Inc. (TRMB), Aerojet Rocketdyne Holdings, Inc. (AJRD), Astronics Corporation (ATRO), which are rated Buy in our proprietary rating system, could witness significant upside in the near term.
Trimble Inc. (TRMB)
TRMB provides technology solutions that help professionals and field mobile workers enhance and improve their work processes worldwide. The company operates through four segments- Buildings and Infrastructure; Geospatial; Resources and Utilities and Transportation.
In February 2022, Trimble announced the launch of the Trimble Jobsite Connectivity Bundle, a software that links 3D models and data across Trimble construction hardware and software solutions. This interoperability would provide an efficient, reliable, easier, and single-sourced transfer of project data to the contractors in the field and office, and thus the software could gain popularity in no time.
Also, in the same month, the company introduced the Trimble® Roadworks Paving Control Platform for Asphalt Compactors that enables operators to accurately control the compaction process while reducing unnecessary passes that can result in over compaction. Given the expected influx of projects due to increased infrastructure funding over the coming months, the platform should be in demand.
TRMB’s total revenue increased 11.6% from the prior-year quarter to $926 million in the fiscal fourth quarter ended December 31, 2021. Its operating income grew 4.8% from the year-ago value to $127.80 million. The company reported an annualized recurring revenue of a record $1.41 billion, up 9% year-over-year. Also, its annual operating cash flow stood at a record $750.50 million, indicating an increase of 12% year-over-year.
The consensus EPS estimate of $0.67 for the fiscal first quarter ending March 2022 represents a 1.6% improvement year-over-year. The consensus revenue estimate of $967.25 million for the same quarter represents a 9.1% increase from the same period last year. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has slumped 4.4% intraday to close the last trading session at $63.54.
TRMB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. TRMB also has a B grade in Value. The stock is ranked #14 of 47 stocks in the Technology – Electronics industry.
In addition to the POWR Rating grades I’ve just highlighted, you can see the TRMB ratings for Growth, Momentum, Stability, Sentiment, and Quality here.
Aerojet Rocketdyne Holdings, Inc. (AJRD)
AJRD manufactures aerospace and defense products and systems. It operates through the Aerospace and Defence and Real Estate segment. The company directly serves the US government, including the Department of Defence (DoD), the National Aeronautics and Space Administration (NASA), and the prime aerospace and defense contractors.
In February 2022, Aerojet Rocketdyne had successfully tested its innovative and advanced rocket motor technology as a part of the LC-TERM technology program of the US army. The solid rocket motor had completed the test and met all the requirements as expected. “This successful test demonstrates Aerojet Rocketdyne’s advanced propulsion capabilities that continue to position our warfighters with a superior technical advantage,” said Eileen P. Drake, Aerojet Rocketdyne CEO, and president.
On the same day, AJRD had successfully built and tested a Stored Chemical Energy Propulsion (SCEPS) that would power the US navy’s torpedoes and strengthen their under-sea capabilities. This self-funded manufacturing demonstrated AJRD’S superior capabilities and commitment to providing affordable and high-quality products to the US navy and should generate significant revenues for the company.
AJRD’s net sales increased 6% year-over-year to $589.70 million in the fiscal fourth quarter ended December 31, 2021. Its operating income grew 12.9% from the year-ago value to $65.50 million, while its net income improved 7.3% year-over-year to $38 million. Its EPS increased 7% from its year-ago value to $0.46.
Analysts expect AJRD’s revenue for the quarter ending March 2022 to come in at $525.20 million, indicating a 5.9% year-over-year growth. The company’s EPS is expected to increase 16.4% year-over-year to $0.42 for the same quarter.
AJRD has gained 10% over the past month and 2.5% over the past five days to close the last trading session at $40.69.
AJRD’S POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system. AJRD is also rated B in Growth, Value, and Quality. Among the 73 stocks in the Air/Defense Services industry, it is ranked #15.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for AJRD, click here.
Astronics Corporation (ATRO)
Founded in 1968, ATRO, along with its subsidiaries, designs and manufactures technological solutions for the global aerospace, defense, electronic, and other mission-critical industries. The company operates through two segments- Aerospace and Test Systems in the US, North America, South America, Europe, Asia, and internationally.
ATRO’s sales increased 1.1% year-over-year to $116.05 million in the fiscal fourth quarter ended December 31, 2021. Its net income improved 108% year-over-year to $1.60 million over the period, while its EPS increased 107.7% from its year-ago value to $0.05.
Street expects the EPS for the fiscal first quarter ending March 31, 2022, to improve 92.3% year-over-year. The consensus revenue estimate of $116.77 million for the same quarter represents a 10.3% increase from the same period last year.
Over the past month, the stock has gained 11% to close the last trading session at $12.88. It has gained 7.3% year-to-date.
It is no surprise that ATRO has an overall rating of B, translating to Buy in our POWR Ratings system. The stock also has a B grade in Quality and Value. It is ranked #11 in the Air/Defense Services industry.
Beyond what is stated above, we’ve also rated ATRO for Momentum, Stability, Sentiment, and Growth. Get all the ATRO ratings here.
TRMB shares were trading at $64.65 per share on Tuesday afternoon, up $1.11 (+1.75%). Year-to-date, TRMB has declined -25.85%, versus a -12.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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