Why Rocket Lab’s latest results matter for investors

Rocket Lab (RKLB) just reported record fiscal 2025 revenue of US$601.8 million, paired with fresh guidance and a growing government contract backlog, while also completing another hypersonic test mission for the Defense Innovation Unit.

At the same time, institutional investors have been increasing their positions as executives sell shares. Large funds are absorbing that supply and treating Rocket Lab’s expanding launch cadence and contract wins as a long term, program driven story.

The recent earnings beat, new BlackSky multi launch deal, silicon solar array unveiling and hypersonic HASTE mission have come alongside a 90 day share price return of 45.66% and a very large 3 year total shareholder return. This suggests momentum has been building despite a softer year to date share price return decline of 5.37%.

If this kind of space and defense story has your attention, it could be worth scanning our screener of 35 AI infrastructure stocks as another way to find companies tied to the data and compute build out behind these missions.

With record revenue of US$601.8 million, a reported contracted backlog of about US$1.85b, a 3 year total shareholder return that is very large, and a 24.99% discount to the average analyst target, is Rocket Lab still mispriced or is the market already baking in future growth?

Most Popular Narrative: 26.5% Undervalued

Rocket Lab’s last close of $71.91 sits well below a fair value of $98 according to the most followed narrative, which frames the recent revenue print as one step in a much bigger space economy story.

Since my original post, RKLB has continued to expand its space systems business, including through acquisitions and raising more capital. Its Neutron rocket is still largely on schedule; and as expected, no major new players have arrived to take RKLBs #2 spot in space launch. This all means Rocket Lab's revenue can be expected to increase faster (though in a very lumpy manner, not the smooth curves that SimplyWallSt's valuator produces), reaching ~$44b by 2035, equivalent to around 5% market share of the ~$800B space ''backbone'' economy. The new acquisitions and prevailingly limited competition mean future net profit margins can be expected to be higher before, now estimated to be 20% for net earnings of ~$9B.

This narrative leans on a big revenue step up, fatter profit margins and a future earnings multiple more often linked with mature growth leaders. Curious how those moving parts combine to reach a fair value well above today’s price without relying on current profitability or traditional multiples? The full story lays out the numbers and timing behind that gap.

Result: Fair Value of $98 (UNDERVALUED)

However, this story still hinges on Neutron reaching commercial service and on Rocket Lab turning a US$198.2 million net loss into sustainable profitability without straining its balance sheet.

Another angle on what Rocket Lab is worth

While the most followed narrative points to a fair value of about $98 and calls Rocket Lab undervalued, our DCF model paints a very different picture. On that view, the stock at $71.91 sits well above an estimated future cash flow value of $7.86, which suggests a lot has to go right. Which story do you think fits your risk comfort better?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Rocket Lab for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With the story pulling in both risks and rewards, do you want to rely on others or test the data yourself and move quickly? A good next step is to weigh those trade offs directly using our breakdown of 1 key reward and 3 important warning signs.

Looking for more investment ideas?

If Rocket Lab has you thinking bigger picture, do not stop here. Broaden your watchlist now so you are not catching up after the next move.

• Target quality at a discount by scanning companies our screener tags as 47 high quality undervalued stocks that still pair financial strength with appealing pricing.
• Strengthen your income stream by reviewing businesses in our list of 14 dividend fortresses that may help anchor a portfolio with regular cash returns.
• Reduce portfolio stress by focusing on companies in our 77 resilient stocks with low risk scores that score well on stability and downside protection.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.