Why Did Karman Space Stock Drop Today?
Key Points
Karman "beat" on sales and met expectations on earnings last night.
The recent space and defense IPO reversed last year's Q1 losses to report a Q1 profit in Q1 2026.
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Karman Space & Defense (NYSE: KRMN) stock tumbled 6.8% through 10 a.m. ET Wednesday despite reporting decent earnings last night.
Analysts expected the space stock to earn $0.11 per share on sales of $150.2 million. Karman did, in fact, earn $0.11 -- with $151.2 million in sales. It didn't just "beat by a penny" -- Karman beat by a million dollars (albeit in revenue)!
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Karman Space Q1 earnings
Was Karman's news bad enough to justify the sell-off? Not necessarily.
Going through the numbers, we find Karman grew its sales 51% year over year in Q1. Its earnings performance was arguably even better. Although the company's "$0.11" profit is a non-GAAP number, earnings calculated under generally accepted accounting principles (GAAP) were $0.06 per share -- less than non-GAAP earnings, but still a big improvement over the $0.04 per share that Karman lost in last year's Q1.
Best of all, Karman reported that its backlog of work jumped 61% over the past year to $1 billion. Backlog foreshadows revenue growth, and with backlog up even more strongly than revenue, I'd say the picture looks good for continued sales growth at Karman.
What's next for Karman Space stock?
Karman agrees. After beating earnings last night, Karman management raised guidance for the rest of 2026. The company now expects to record revenue between $720 million and $735 million this year. No word on GAAP earnings, but management did say it thinks "adjusted EBITDA" (that's earnings before interest, taxes, depreciation, and amortization) this year should be about $214 million -- nearly 5x what Karman booked in Q1.
And this implies that profits are growing as well.
Karman's still not a cheap stock, costing 17 times sales and 468 times earnings. But at least it's moving in the right direction.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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