Two months ago, Canadian aerospace star Maxar Technologies (NYSE:MAXR) made the move to begin trading its stock on the NYSE. (Dual-listed, Maxar also continues to trade on Canada's Toronto Stock Exchange.) Two months later, it has released its first earnings report as a U.S.-listed company. So how did Maxar do?
Here's what you need to know.
The headline numbers
Conveniently for investors, Maxar timed its first earnings release as a U.S. company so it would coincide with the end of its fiscal year 2017, giving us a clear picture of a whole year's worth of results in one glance. In 2017, Maxar grew its sales 5% to $1.6 billion. Earnings fell 5% to $100 million, and to make matters worse, Maxar also grew its share count by 13%, which means Maxar spread out its profits across more shares outstanding. This hurt per-share profits even more than the net income decline did, causing diluted earnings per share to fall 14% to $2.43.
Additionally, these results fell far short of what Wall Street had been expecting Maxar to report. According to data from Yahoo! Finance, the consensus among analysts who follow Maxar was that the company would report $4.19 per share in profits on $1.75 billion in sales. Shares promptly plunged in response, losing 12% of its value on Friday, the day after the results came out. Maxar stock has since dropped a further 7%.
What comes next
Maxar has been in the news a lot lately, scooping up rival space tech firms and landing contracts from U.S. government agencies. The company says it also plans to build a new satellite factory in Palo Alto, California. The aim, says CEO Howard Lance, is to turn Maxar into "a unique integrated space and geospatial intelligence company with end-to-end solutions expertise to serve both commercial and government markets."
Granted, this "unique" company appears to be struggling on the profits front lately. Still, Lance noted that Maxar is "making steady progress on delivering revenue and cost synergies of [$55 million to $110 million] in EBITDA to be achieved by the end of 2019," and believes it will succeed in cutting costs by about $25 million in 2018 alone.
Taking these savings as a given, Maxar issued new financial guidance for 2018, predicting that the company will earn adjusted (i.e., not GAAP) earnings of between $4.50 and $4.70 per share this year despite revenue declining between 2% and 4% year over year.
Valuing Maxar Technologies stock
While GAAP guidance would have been preferable, this still suggests that things should be looking up for Maxar in 2018. By the company's calculations, you see, Maxar earned $4.16 per share in adjusted earnings in 2017. Thus 2018's performance should show at least an 8% increase in such pro forma profits.
That being said, at a valuation of 21 times trailing GAAP earnings, Maxar stock doesn't look terribly attractive if it can only muster an 8% earnings growth rate this year -- and pro forma growth at that. Judging from Wall Street's reaction to Maxar's news last week, it seems a lot of investors agree.