Intuitive Machines Inc. LUNR recently revealed that it has successfully integrated Nokia’s Lunar Surface Communication System into the IM-2 mission lander, named Athena. Following this, Nokia and Intuitive Machines aim to deploy the first cellular network on the Moon, via the upcoming IM-2 mission. 

This reflects yet another attempt by Intuitive Machines to strengthen its dominance in the cislunar space and, therefore, might lure investors interested in space stocks to add LUNR to their portfolio. However, before making any hasty decision, it would be prudent to take a look at how the company has performed at the bourses over the past year, the stock’s growth prospects and risks (if any) to investing in it. The idea is to help investors make a more insightful decision.

LUNR Stock Outperforms Industry, Sector & S&P 500

Intuitive Machines’ shares have surged a massive 636.3% over the past year against the Zacks Aerospace-Defense industry’s decline of 2.4%. The stock has also outperformed the broader Zacks Aerospace sector’s growth of 7.7% as well as the S&P 500’s surge of 26.8% in the same period.

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Other industry players, such as Leidos Holdings LDOS , TransDigm Group TDG and Lockheed Martin LMT, have also delivered a stellar performance, with their shares surging 42.9%, 28.1% and 6.6%, respectively, over the past year.

What Led to LUNR Stock’s Rise?

2024 was an overwhelming year for Intuitive Machines, highlighted by multiple achievements like notable contract wins, valuable partnership agreements as well as significant progress in lunar landing missions. 

In February 2024, Intuitive Machines’ IM-1 mission successfully launched its Nova-C lunar lander aboard SpaceX’s Falcon 9, achieving stable attitude, solar charging and radio contact with its Houston mission operations center. In August, the company secured a $116.9 million contract to deliver six payloads, including a European Space Agency drill, to the Moon’s South Pole and also signed a rideshare services agreement with SEOPS. 

In September, NASA awarded Intuitive Machines a $4.82 billion Near Space Network (“NSN”) contract for communication and navigation services. November saw the unveiling of LUNR’s Moon RACER lunar terrain vehicle for NASA's Artemis program. The company ended the year by securing additional NASA NSN contracts for Direct-to-Earth services, which thereby solidified its role in lunar and deep-space missions.

These demonstrate LUNR's achievements in capitalizing on the growth opportunities of the expanding commercial lunar economy, which, in turn, must have boosted its share price over the past year.

Will LUNR Stock Continue to Grow?

The space economy, projected to reach $1.8 trillion by 2035 (World Economic Forum, April 2024), offers substantial opportunities for innovation and expansion. Against this backdrop, Intuitive Machines is well-positioned for growth in the space exploration industry, supported by significant investments from the U.S. government and private sector. Notably, LUNR is currently working on its largest lander, the Nova-M, designed to transport 5,000-7,500 kilograms of payload to the Moon’s surface. Upon launch, this innovation is expected to generate robust revenues.

Additionally, Intuitive Machines ended the third quarter of 2024 with a healthy backlog of $316.2 million, a sequential improvement from $213 million. This growing backlog reflects solid revenue-generation potential and underpins future earnings growth. As space exploration continues to thrive, Intuitive Machines is well-poised to capitalize on these expanding market opportunities.

A sneak peek at its estimates mirrors a similar picture.

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Estimates for LUNR

The Zacks Consensus Estimate for LUNR’s fourth-quarter revenues implies a solid improvement of 87.8% from the prior-year quarter’s level, while that for 2024 indicates 189.6% growth year over year. 

The estimated figure for 2025 also indicates a similar picture. The upward revision in its first-quarter 2025 earnings estimates indicates analysts’ improving confidence in the company’s bottom-line growth. However, the consensus estimate for 2025 earnings has remained stable.

LUNR Stock’s Premium Valuation

LUNR stock is not at all cheap, as its Value Score of F suggests a stretched valuation at this moment.

Moreover, its forward 12-month price-to-sales (P/S) is 8.13X, a premium to its peer group’s average of 1.62X. This suggests that investors will be paying a higher price than the company's expected sales growth compared to that of its peers. The company’s forward P/S also looks stretched when compared to the median of its one-year range, 2.98.

LUNR’s Price/Sales Ratio (F12M)

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Risks to Consider Before Selecting LUNR

Despite the aforementioned growth opportunities, LUNR currently faces certain challenges, which one should consider before investing in the stock. One such challenge is that the company is still in the preliminary stages of developing its full space infrastructure. If it fails to demonstrate the reliability of its products and services through a successful lunar landing or delays completing specific space missions, its results of operations might suffer.

Moreover, the company faces industry-specific headwinds like the shortage of skilled labor, which might lead to a failure in finishing its products within the scheduled time. This might hurt its revenues.

Final Thoughts

To conclude, investors should refrain from adding LUNR stock to their portfolio right now, considering its premium valuation and VGM Score of F, which is not a favorable indicator of strong performance. 

However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, considering its robust share price performance, robust revenue growth prospects and solid liquidity, as evident from the massive 170.6% sequential improvement in its cash balance as of Sept. 30, 2024.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report

Intuitive Machines, Inc. (LUNR) : Free Stock Analysis Report

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