Why Redwire Corporation Stock Soared Today
Key Points
Redwire reported Q1 earnings a week ago.
The stock didn't rocket 25% in a day until today -- and it's not clear why.
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Redwire Corporation (NYSE: RDW) stock ran up 26% through 1 p.m. ET Thursday, despite there being no obvious news behind the move.
No obvious news today, that is. Last week, Redwire reported Q1 financial results, and Redwire stock has been lurching higher in fits and starts ever since.
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Redwire Q1 earnings
Amid excitement about SpaceX's upcoming IPO, and earnings reports from higher-profile space stocks such as Rocket Lab and AST SpaceMobile, it's not surprising if Redwire's news got lost in the shuffle, causing investors to delay reaction. Still, it's worth recapping this news now that the stock is moving:
On the surface, Redwire's news wasn't great. The space stock "missed" earnings forecasts, reporting a $0.40-per-share loss on $96.7 million in sales (both below expectations). On the other hand, Redwire did grow its sales nearly 58% year over year, grow its gross profit margin to 26.6%, and collect significant new orders in the quarter.
In fact, with new contracts coming in at nearly twice the pace of old contracts getting fulfilled, Redwire reported a book-to-bill ratio of 1.9x -- indicative of strong revenue growth ahead.
What's next for Redwire stock?
On guidance, Redwire forecast full-year revenue between $450 million and $500 million. At the midpoint, that's more than the $469 million that Wall Street expected, suggesting any revenues missed in Q1 will be made up later in the year.
Is it good enough to explain a sudden 26% surge in the stock price today? I'm not so sure. Redwire didn't promise to earn any profit on its growing revenue, after all. Most analysts polled don't expect the company to turn GAAP-profitable before 2029 at the earliest.
Unprofitable Redwire stock might not be a sell, but I'm not sure it's a buy at this price either.
Should you buy stock in Redwire right now?
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Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends AST SpaceMobile, Redwire, and Rocket Lab. The Motley Fool has a disclosure policy.
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