Intuitive Machines (LUNR, Financial) stock surged 56.57% shortly after the market opened on Wednesday. This followed NASA's announcement of a substantial $4.8 billion moon contract awarded to the company.
The contract, named "GEO to Cislunar Relay Services," will cover communication services to the moon from October 1, 2024, through September 30, 2029. There is also an option to extend the contract for an additional five years until September 30, 2034.
NASA has hired Intuitive Machines to provide essential communication services, including position, navigation, and timing capabilities. These services are critical for ensuring safe navigation on and around the lunar surface. The company will establish relays for communications between geostationary orbit (GEO) and the moon.
This contract represents a new type of work for Intuitive Machines, extending beyond their existing contracts for landing payloads on the moon. This expansion into space communications could potentially be a billion-dollar-a-year business for the company.
From a valuation standpoint, Intuitive Machines (LUNR, Financial) presents a complex picture. Despite its positive contract news, the stock has displayed significant volatility. Its GF Score is notably low at 16, indicating weak overall financial health and growth prospects. The GF Value methodology does not provide a solid valuation estimate for the stock. However, investors can check the latest GF Value for ongoing updates.
Several medium and severe warning signs are present for LUNR. The company's financial strength shows distress with an Altman Z-Score of -1.71, indicating a strong possibility of bankruptcy within the next two years. Its Piotroski F-Score stands low at 2, typically implying poor business operations. Additionally, the Beneish M-Score of 5.07 suggests possible financial result manipulations.
LUNR's revenue growth has been inconsistent, with a decline of 11.1% over the past 12 months, which raises concerns despite the new contract's potential to boost future revenues. Insider selling has been substantial, with 4,016,220 shares sold over the past three months without any insider buying, further adding to the stock's risk profile.
For those considering the stock, it's crucial to weigh these significant risks against the potential upside from the new NASA contract. As always, thorough due diligence and a careful assessment of the company's financial health should guide investment decisions.
