Why Redwire Stock Looks Red Hot Today, and RTX and AeroVironment Are Rising

Redwire's Acquisition of Edge Autonomy - Redwire announced the acquisition of AI and drone-tech specialist Edge Autonomy for $925 million, paid in cash and stock [2][5] - The acquisition is expected to transform Redwire into a global leader in multi-domain autonomous technology, broadening its portfolio to include combat-proven autonomous airborne platforms [6] - Redwire estimates the combined companies could generate$ 535 million to $605 million in sales this year, potentially doubling Redwire's previous annual revenue of$ 298 million [7] - The acquisition is expected to turn Redwire free-cash-flow positive this year, despite burning $14.9 million in negative free cash flow over the last year [7][8] Market Reaction and Valuation - Redwire's stock surged 44.5% following the acquisition announcement [2] - The acquisition implies a price-to-sales (P/S) ratio of 3.1 to 3.9 times for Edge Autonomy, compared to Redwire's own P/S ratio of 3.2 times [9] - The deal is considered a good but not great deal, potentially justifying a small premium for a business that could double Redwire's size and scale of production [9][10] Impact on Competitors - Redwire's acquisition had a positive impact on competitors in the defense industry, with RTX Corporation up 3.4% and AeroVironment up 4.5% [3] - AeroVironment, a pure play on drone technology, is seen as a modest positive beneficiary of Redwire's interest in Edge Autonomy [11] - RTX, with a P/S ratio of 2.1 times, is considered the cheapest among the three defense stocks moving on Redwire's news, though it is not a major player in drones [11] Financial Implications - Redwire will need to borrow money and increase its debt load to complete the acquisition, as it only had$ 43 million in cash and $138 million in debt at last report [6] - The acquisition is expected to immediately grow Redwire's revenues and free cash flow, though the exact amount of free cash flow generated was not specified [7][8]