It's hard to make predictions, especially about the future. Nevertheless, I'm going to pull out and dust off the ol' crystal ball, and do my best to tell you what to expect from Intuitive Machines (LUNR +2.26%) stock over the next five years.
But it's not going to be easy.
NASDAQ: LUNR
Key Data Points
Where Intuitive Machines is today
Two years out from its February 2023 IPO, Intuitive Machines has already made a lot of progress. The past couple of years have seen "the most NASA-awarded commercial lunar program," run by Intuitive Machines, collect a total of four contracts to run payload deliveries to the moon -- and complete two of them. Both missions were only partially successful, however, landing intact on the moon and delivering some payloads, but toppling over and falling on their sides after landing -- a strong indication of a design flaw in the Nova-C lander.
Nevertheless, the company is collecting $77 million and up from NASA for each landing attempt, and collecting additional revenue from tacking on piggyback payloads from other customers alongside the NASA deliveries. Annual revenue hit $228 million last year, triple what the company collected in 2023. Wall Street analysts forecast continued growth in the moon-supply business, too, with revenue estimated to reach $280 million this year (23% growth), and $387 million next year (38% growth).
So in fact, revenues aren't just growing -- the growth rate itself is accelerating! That's the very definition of a growth stock.
Granted, Intuitive Machines isn't profitable yet. Indeed, the company recorded more than $343 million in losses last year, albeit much of this was related to the cost of retiring its stock warrants. Analysts polled by S&P Global Market Intelligence anticipate much lighter losses of less than $35 million this year, and predict that by 2026, the company could earn its first (small) generally accepted accounting principles (GAAP) profit.
Where Intuitive Machines might be in five years
So much for the near-term view. Now let's look into the future and consider where Intuitive Machines might be at the beginning of 2030.
NASA contracts for payload delivery to the moon are currently scheduled to proceed at the rate of about one mission per year, so there won't be much growth there. At least, not until Intuitive can ensure that its weebles only wobble and don't fall down once reaching their target. For the time being, NASA is anticipating the company's IM-3 mission will go to the moon sometime in 2026, and IM-4 will launch in 2027. It hasn't committed to any further missions after that.
Image source: Getty Images.
What NASA has committed to, though, is more than enough to keep Intuitive Machines' growth engine going: a $4.8 billion, 10-year-long contract to build and operate a Near Space Network (NSN) space communications system connecting comms networks on the moon with communication satellites orbiting Earth. Worth roughly $480 million per year to Intuitive Machines, the value of this contract alone accounts for more than 100% of all the revenue Intuitive is currently expected to collect over the next five years (which add up to less than $2.3 billion currently), according to Wall Street analyst estimates.
This could mean any of three things, it seems to me, ranging from option 1 (Wall Street analysts can't do math very well) to option 2 (analysts can do math, but are holding off on updating their forecasts for Intuitive Machines until we learn more about the NSN contract), to option 3 (Wall Street doesn't think the contract will materialize, or for some reason won't be worth the entire $4.8 billion to Intuitive Machines).
Is it time to buy Intuitive Machines stock?
If, however, you take Intuitive Machines' big NASA contract at face value, the implications seem pretty clear.
Over the next five years, Intuitive Machines' annual revenue will likely average at least twice what it gets today, and revenue five years from now is likely to be far larger than what Wall Street analysts currently forecast. And seeing as these forecasts already anticipate the company growing to $625 million in annual revenue, with $113 million of that profit (a robust 18% net profit margin), the chances look good to me that Intuitive Machines will actually end up earning more profit than the analysts are forecasting as well.
With Intuitive Machines stock currently valued at almost precisely $1 billion, I calculate the stock costs just over 4 times trailing sales at present. By my calculations, that's near the top of the range of acceptable valuations for space stocks that are not yet profitable.
The last time Intuitive Machines stock fell below this valuation, I opened my first position in the stock. If it gets cheaper again, I plan to buy even more.
