Rocket Lab Wins NASA Contract: How Should an Investor Play the Stock?

Core Viewpoint - Rocket Lab USA, Inc. has secured a significant NASA contract for the Aspera astrophysics mission, enhancing its reputation in advanced space science and potentially driving long-term revenue growth [1][2]. Company Performance - Rocket Lab's stock has increased by 30.7% over the past six months, outperforming the Zacks aerospace-defense industry's growth of 8.3%, the broader Zacks Aerospace sector's rise of 5.8%, and the S&P 500's decline of 0.1% during the same period [4]. - The company has been actively expanding its role in both government and commercial space sectors, with notable contracts and launches contributing to its stock performance [6][12]. Recent Developments - Rocket Lab announced the launch of its new medium-lift reusable rocket, Neutron, for the U.S. Air Force Research Laboratory's Rocket Cargo mission [7]. - The company was selected to launch a hypersonic test flight for the Department of Defense and introduced customizable solar arrays for satellite power needs [8]. - A $5.6 billion contract from the U.S. Space Force under the NSSL Phase 3 Lane 1 program was secured, allowing competition for national security launches [9]. - Rocket Lab's partnership with the Institute for Q-shu Pioneers of Space was expanded, and it successfully completed a hypersonic tech test mission for the Department of Defense [10]. Market Outlook - The commercial space sector is booming, driven by rising global security concerns, which is expected to increase demand for Rocket Lab's launch services and satellite solutions [13]. - The space economy is projected to reach $1.8 trillion by 2035, bolstering Rocket Lab's growth prospects [14]. Sales and Earnings Estimates - The Zacks Consensus Estimate for Rocket Lab's sales in 2025 and 2026 indicates year-over-year growth of 32.1% and 48.2%, respectively [15]. - Earnings estimates for 2025 and 2026 also reflect positive growth, with a notable upward trend in analysts' confidence regarding the company's earnings generation capabilities [16]. Valuation Metrics - Rocket Lab's forward 12-month price-to-sales (P/S) ratio is 16.77X, significantly higher than the industry average of 2.05X, indicating a premium valuation [22]. - Comparatively, industry peers like Embraer and RTX are trading at lower P/S ratios of 1.17X and 2.11X, respectively [23].