Investors in Maxar Technologies (NYSE:MAXR) got a pleasant surprise Wednesday morning when shares of the Canadian-American space company jumped after a second-quarter earnings report that featured a big decline in sales -- but a much bigger increase in profit. Shares closed the day up more than 11%.
Maxar reported that in Q2 2019, its sales declined 15%, hurt by weakened revenues in the company's satellite and satellite photography businesses. Despite this, it managed to earn $2.45 per share under generally accepted accounting principles (GAAP), a big improvement from the year-ago quarter's GAAP loss of $0.70 per share.
The company did note, however, that the increase in earnings came about primarily from a one-time event: the receipt of its long-awaited $183 million insurance claim on the WorldView-4 satellite that went kaput back in January.
The big question now is whether Maxar will be able to remain profitable in the absence of similar large insurance windfalls.
For what it's worth, analysts who follow the stock predict that Maxar will in fact remain profitable this year -- and end up earning $0.40 per share by year's end. Considering this is a much smaller number than $2.45, however, that forecast isn't particularly good news for shareholders. What it means is that analysts basically expect Maxar to be counting down from $2.45 for the next six months, as losses eat away at the "profits" from the insurance payout.
Forecasts, meanwhile, call for losses through at least the next two years, which is as far out as the estimates go.
Shareholders got a welcome reprieve today. We hope it lasts -- but right now, it doesn't look like it will.