Could Redwire Be the Next Rocket Lab?

Rocket Lab (NASDAQ: RKLB) just pushed the first launch of its Neutron rocket to 2027, and the stock has dropped more than 20%. But the company has grown beyond rocket launches to become a broader space technology company.

Could Redwire (NYSE: RDW) follow a similar path? With its space infrastructure business expanding and defense technology gaining traction, Redwire is benefiting from several growth drivers. The big question now is whether it has what it takes to become the next Rocket Lab.

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Redwire is becoming a major space infrastructure company

Redwire supplies the technology that enables space missions, including solar arrays, spacecraft components, and microgravity research systems. It also expanded into surveillance and autonomous defense.

Notably, Redwire's core space business plays a key role in the industry's next phase. For example, its Roll-Out Solar Array (ROSA) technology provides deployable solar power for spacecraft and orbital infrastructure. In fact, the company announced that the final pair of its ROSA wings launched to the International Space Station, helping it complete a major power modernization effort.

That gives Redwire exposure to several long-term trends at once: the commercial space market, government space programs, and rising defense spending. But the bigger opportunity now is that Redwire could evolve from a specialized supplier into a broader aerospace and defense technology business, opening more avenues for growth.

Defense adds another growth engine to Redwire's business

Redwire's acquisition of Edge Autonomy helped transform it into a more diversified defense company. The deal brought uncrewed aerial systems into its portfolio, including the Stalker and Penguin platforms. These systems are designed to support intelligence, surveillance, and reconnaissance missions, areas where the military is strengthening its autonomous capabilities.

Redwire also announced additional orders for the Stalker drone for the U.S. National Guard. On top of that, it was selected for the Space Systems Command's $980 million NITE-STAR contract, creating opportunities to compete for future work.

Meanwhile, the company's growing backlog is proof that it can already win contracts and offer better revenue visibility. In its second-quarter results, the company reported record revenue and a record contracted backlog, indicating more signed work is awaiting delivery.

Revenue rose around 90% year over year to $117.1 million, while contracted backlog reached $542.1 million. Management reiterated its full-year revenue guidance of $450 million to $500 million.

Redwire's solid Q2 results were driven by its expanding defense business, supported by demand for Stalker and Penguin drones and higher production volumes. New military contracts and follow-on awards helped push bookings above revenue; in fact, defense was the key driver of growth. That raises a fair question: How much of that growth is already priced into the stock?

Is Redwire stock a buy at its current valuation?

Wall Street remains bullish on Redwire, with a consensus of 11 analysts rating it a Moderate Buy. Their price targets, meanwhile, suggest potential upside of up to 851% over the next year.

But with the stock trading at over 6.3 times sales, buyers are paying a premium for the company's growth potential. Plus, its expanding defense business and record backlog help justify that optimism. By comparison, Rocket Lab trades at about 50 times sales.

Still, Redwire must deal with execution risk. Space programs can face delays, cost overruns, and contract changes. Competition from more established contractors and other space companies could also put pressure on margins. That's why Redwire's diversification makes its investment case more resilient. If one part of the space market slows down, other areas may provide another source of demand.

Rocket Lab faces its own execution risk, too. The company hasn't given a specific launch date for Neutron, and a longer delay could keep pressure on the stock.

Ultimately, becoming the next Rocket Lab will require more than just winning new contracts. The real test is whether Redwire can turn its growth into sustainable profits and cash flow. For investors willing to take on that risk, Redwire is a space stock certainly worth watching.

Rick Orford has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.