Iridium Communications reported Q3 2026 earnings well ahead of analyst expectations, helped by its Aireon acquisition. Because Rocket Lab is buying Iridium, the Motley Fool's analysis argues the results are good news for Rocket Lab too. The same analysis calls Rocket Lab's valuation not exactly cheap.
Iridium Communications reported $0.98 per share in profit for Q3 2026, nearly three times what Wall Street predicted. Sales came in at $245.7 million, against an expected $236.3 million. Analysts had pegged the profit at $0.34 per share.
Iridium's own shares barely moved, costing $44.18 on Monday evening before the report and $44.25 at Wednesday's close. Rocket Lab stock, however, is up 4.5% since the report.
Aireon drives the beat
Iridium management credits its July reacquisition of Aireon, a space-based air traffic surveillance company, with much of its 8% year-over-year revenue increase. Gains related to the acquisition also accounted for earnings coming in triple what Wall Street expected.
The deal also gave Iridium control over what it calls the world's only space-based ADS-B air traffic surveillance system. Rocket Lab's acquisition of Iridium is expected to take effect mid-next-year, making that system a key part of its plan to expand into satellite-based Internet of Things, direct-to-cell communications and position, navigation and timing (PNT) markets.
What Iridium's numbers mean for Rocket Lab
Forecasts compiled by S&P Global Market Intelligence indicate Iridium should earn more than $210 million next year, up 35.5% year over year. Free cash flow is expected to rise 28% to $379 million. Assuming the analysts' math holds, that should cover Rocket Lab's expected $74 million loss next year and its $83 million in negative free cash flow.
Iridium may also beat current estimates. Analysts expect it to earn $155 million this year, but it has already earned more than $138 million in the first three quarters of 2026, or 89% of that target.
Author calls Rocket Lab's valuation not exactly cheap
The article's author estimates a combined Rocket Lab and Iridium might generate $300 million or so in positive free cash flow next year. On Rocket Lab's current $45 billion market capitalization, that works out to a 150x forward price-to-free cash flow ratio. The author calls that not exactly cheap and says Iridium needs to perform even better in 2027 than it is in 2026.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
