Virgin Galactic SPCE is a vertically integrated aerospace company, pioneering human spaceflight for private individuals and researchers. They also manufacture advanced air and space vehicles. Using its proprietary and reusable technologies and supported by a distinctive, Virgin-branded customer experience.
Valuation and Growth
SPCE stock is a bad value based on its P/B ratio of (13.8x) compared to the US Aerospace & Defense industry average (3x). The market is pricing this stock as a high-growth company, and analysts agree with forecasted annual earnings growth of 42.8% compared to the industries 18.5%, as well as an average price target of $31.82 per share. Implying a 33.5% increase over the current share price of $23.83. Analysts forecast revenue to grow at 72% per year. The global space launch services market size was valued at $9.88 billion in 2019 and is projected to reach $32.41 billion by 2027, growing at a CAGR of 15.7%from 2020 to 2027 according to allied market research.
SPCE stock has a strong financial position with assets of $609MM and liabilities of just $113MM. They use very little debt relative to equity with a debt-to-equity ratio of just 0.07%. Lastly, they have a cash runway of at least a year based on current financials. Meaning they could finance operations for that long without needing outside capital.
SPCE has yet to achieve meaningful revenues to sustain the business. SPCE will not become profitable over the next 3 years. Space flight is expensive meaning high capital needs. They have diluted shareholders over the past year by issuing more shares.
Investing is all about risk and reward. Space travel will be an ever-increasing pursuit for humans. This is one of the few companies that can properly capitalize on this opportunity. SPCE is still early on its journey this can create a great investment opportunity for an aggressive investor. Although the road may be a painful one.
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