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Why Maxar Technologies Stock Just Got Destroyed

By Rich Smith - May 4, 2021 at 11:42AM

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For the second quarter in a row, Maxar lost money.

What happened

Tuesday is turning into a bad day to own Maxar Technologies (MAXR 5.23%) stock.

Maxar shares tumbled 24.5% through 11 a.m. EDT this morning after the "space infrastructure" builder and Earth imaging satellite photographs-taker reported worsening GAAP losses in Q1 2021, despite slightly improved sales.

Big red arrow going down over a stock chart

Image source: Getty Images.

So what

Total sales inched up 3% year over year for Maxar, but the composition of those sales was not at all what might be desired. On the one hand, the company recorded 17% more business in its money-losing space infrastructure segment. On the other hand, sales declined 8% in Maxar's high-margin Earth intelligence unit.

As a result, while losses slimmed in the space infrastructure segment (adjusted earnings before interest, taxes, depreciation, and amortization or EBITDA becoming $27 million less negative this quarter than a year ago), profits (i.e., adjusted EBITDA) in the Earth intelligence business fell by almost as much -- $26 million.

When all was said and done, Maxar ended up with lower EBITDA, and lower adjusted EBITDA as well -- and a net loss of $1.30 per share, worse than last year's $0.80 quarterly loss.

Now what

It's not all bad news for Maxar. Operating cash flow turned positive again in Q1 2021 -- $27 million. And while management declined to give guidance in its earnings release, according to data from S&P Global Market Intelligence, analysts who follow the stock are forecasting a return to GAAP profitability as soon as this current quarter, Q2 2021.

Although the size of Q1's loss makes it unlikely that Maxar will turn a GAAP profit this year, analysts predict that by 2022, Maxar should be earning steady and growing profits once again, and producing positive free cash flow besides.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends MAXAR TECHNOLOGIES LTD. The Motley Fool has a disclosure policy.

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