Rocket Lab (RKLB)

The value today by multiples ($11) is below the market price ($64). The present-value lens does not apply to this company, so the contrast between methods is unavailable.

Today — expensive, no margin of safety: at $64 trades ~477.3% above its value discounted to today (~$11); the expected return does not even reach the risk-free rate (4.5%).

At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.

The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$7.

Educational / informational. Does not constitute investment advice.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on EV/EBIT (resultado operativo, suma de las partes). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Rocket Lab is valued as the sum of two parts of distinct nature: Space Systems (manufacturing of components and spacecraft, built through acquisitions) and Launch Services (Electron, with Neutron in development). Consolidated operating income is negative in the TTM (-29.1% margin on US$0.769 billion of revenue) but has improved steadily since 2023 (-72.7% → -43.5% → -38.0% → -29.1%). In the base case the margin path crosses into positive territory between year 3 and year 4, so the year-5 metric is valued (without a metric ladder, same as Snowflake/Cloudflare/Atlassian) and the present-value discount is declared not applicable given the negative initial flow. The exit multiple is a blend weighted by each segment's share of terminal operating income (Space Systems ~55% at 16x, Launch ~45% at 19x), within the 15-22x band of the aerospace archetype. The company does not buy back shares or pay a dividend: all excess is reinvested in Neutron and in acquisitions (GEOST, Aug 2025), so there is no share path or excess-cash accumulation (full reinvestment). The tax rate (13.7%) is derived from the TTM tax expense over TTM pre-tax income, both from XBRL; it reflects the recognition of deferred tax benefits on an accounting loss, not a real cash charge. Maintenance capex is approximated at 50% of total capex (simplified Greenwald convention), given that total capex (19.3% of revenue) more than doubles depreciation.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $14 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $64, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $14 in 5 years and a required return of 4.5% annually, the maximum to pay today is $11. Against the current market price ($64), the margin of safety is -477.3% (trades above the maximum → a premium is paid) and the total return at that price would be -26.4% annually.

• Entry multiple. The market price implies close to 50 times TTM revenue, an extreme multiple even for a high-growth company without positive operating income.
• Consistency with fundamentals. The sum of the parts projected to year 5, with metrics and multiples within the aerospace archetype's band, comes in well below the current price in the base case.
• Margin of safety. No margin of safety: the price already discounts a demanding scenario.
• Scenario sensitivity. Even in the favorable case, with Neutron operating successfully, the value projected at five years remains below the current market price.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ROIC exceeds the cost of capital (~10%)
• ✕CFROIC backs up the ROIC (0%, cash vs. accruals)
• ✓Healthy balance sheet (low corporate debt)
• ✓Durable competitive moat (multiple advantages)

• Cash generation. Operating cash flow has been negative in each of the last four fiscal years and in the TTM (-US$0.222 billion), funded by the cash balance built up in prior stock offerings.
• Return on capital. NOPAT is negative today, so return on invested capital is negative as well; it only normalizes if operating margin crosses into positive territory as the base case projects.
• Reinvestment runway. Capex (19.3% of TTM revenue) more than doubles depreciation, a sign of a company still in a growth-investment phase, not maintenance.
• Earnings quality. Stock-based compensation (10.6% of TTM revenue) is a real cost that reported earnings do not fully reflect unless it is expensed in the valuation metric.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

The three drivers are counts and levels from the company's own 10-K and results 8-K, not analyst estimates. Electron builds and launches measure the operating scale of the mature business; contracted backlog is the leading indicator that anchors the revenue projection for the coming years, because it is already-booked revenue and not a trend extrapolation. It excludes any Neutron driver, since Neutron does not yet generate revenue or separately reported backlog.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Pace of growth. Revenue grew 52.5% in the TTM and contracted backlog 137% year over year, a growth rate typical of a company still penetrating its market.
• Quality of growth. Part of recent growth comes from the GEOST acquisition (August 2025), not entirely organic.
• Visibility. Contracted backlog is a high-signal leading indicator, booked rather than extrapolated, that anchors the revenue projection.
• Room to grow. The medium-lift launch market and the space-defense systems market keep expanding, but Neutron — the gateway to the first — has not yet flown.

• Recurrence and predictability. The US$2.36 billion contracted backlog provides visibility into future revenue, but fixed-price contracts shift cost-overrun risk to the company.
• Product differentiation. Electron has real flight heritage and verifiable regulatory barriers; Space Systems is more commoditized against established aerospace suppliers.
• Pricing power. Revenue per launch rose from US$7.1 million to US$8.5 million between 2023 and 2025 while cost per launch fell, showing the ability to capture value with scale.
• Behavior in adverse cycles. The company has never operated through a full recessionary cycle since its 2021 listing; its dependence on government spending exposes it to budget cuts.

• ✓Leverage (net debt / EBITDA)Net cash $2.3 bn
• ✕Interest coverage (EBIT / interest)EBIT ≤ 0 vs interest $0 bn
• –Liquidity (current ratio)no data
• –Cash quality (CFROIC vs ROIC)ROIC ≤ 0 (see value creation)
• ✕Value creation (ROIC − 10% bar)-26pp
• !Malinvestment test (capex vs incremental ROIC)Capex/D&A 2.4x
• !Float / working capitalConsumes cash $0 bn (positive WC)
• ✕Dilution (SBC % of revenue + shares)SBC 10.7% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Liquidity. US$2.3 billion in cash and short-term investments covers several years of the current cash burn without needing immediate additional funding.
• Leverage. Total debt is only US$1.7 million, practically no financial leverage.
• Cash burn. TTM operating cash flow is negative US$0.222 billion and capex adds another US$0.149 billion, a total burn of more than US$0.37 billion annually.
• Access to capital. The company trades on Nasdaq with broad analyst coverage and has demonstrated the ability to raise capital via stock offerings when needed.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Alignment of interests. Peter Beck owns 7.5% of shares outstanding, a real level of skin in the game for a founder of a company this size.
• Separation of roles. Beck combines founding, board chairmanship and chief executive with no separation of roles, a corporate-governance risk acknowledged in the filing itself as key-person dependence.
• Capital allocation track record. Space Systems' expansion was built through five successive acquisitions since 2020; the filing does not report the return on invested capital for each one.
• Dilution. Diluted shares grew from 466 to 630 million between 2022 and the TTM (~10% annually), with no buyback to offset it.

• The market is paying today for the Neutron optionality and the space-sector narrative, not for the launch and space-systems business it currently bills for.
• There is no evidence of motivated sellers or missing buyers: the stock has broad analyst coverage and is one of the most followed in the listed space sector.
• The 57% decline from the 52-week high reflects the 2Q 2026 result falling short of consensus profitability expectations, not a change in the market's long-term thesis.

The current price capitalizes the business at close to 50 times TTM revenue, a multiple that only holds up if Neutron delivers the jump in revenue per launch that the company has not yet demonstrated. No clear source of discount of the missing-buyers or motivated-sellers type is identified: at this price, the stock remains a bet on the success of a platform that has not yet flown, more than a value opportunity on today's fundamentals.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -46%/year (-95% total): the margin of safety protects the downside. The bull (-15%/year, -56% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Neutron execution. A qualification failure already materialized in January 2026 (tank pressure test rupture), and the first flight keeps being postponed.
• Customer concentration. The top five customers account for ~49% of revenue and ~77% of contracted backlog.
• Government dependence. ~47% of 2025 revenue depends on U.S. government contracts, exposed to government shutdowns and budget cuts.
• History of launch failures. Three failed missions between 2020 and 2023, each with total payload loss and a suspension of launches.
• Concentrated suppliers. Dependence on sole suppliers for composites, inertial measurement units and rare earth minerals, with risk of restricted access.

Each thinker's analytical framework applied to our data.

• Buffett / GrahamQuality + margin of safety

  Fails the quality gate: ROIC -16% does not clear the 10% bar.

• Peter LynchGrowth at a reasonable price (GARP)

  A hyper-growth, growing 20% — no conclusive multiple/growth to judge the price.

• Joel GreenblattCheap and high-return (Magic Formula)

  ROIC -16%; earnings yield not computable (EBIT or EV not positive).

• Howard MarksPerception vs reality + cycle

  The price discounts 150% vs our 20%: priced for perfection, no favorable mispricing.

• Seth KlarmanCapital protection (bear scenario)

  Bear-scenario floor -46%/yr over 5y (material loss) → risk of permanent capital loss.

• Pat DorseyMoat strength (Five Rules)

  A narrow moat, stable; sources: switching costs, intangibles, efficient scale → partially passes the Five Rules.

• Aswath DamodaranExpectations implied by the price

  The price demands 150% growth, far above our 20% — heroic assumptions.