Maxar Technologies (MAXR) trades at a P/S multiple of less than 1x, and a price to cash flow multiple of 4.5x. They have 7% YoY revenue growth and an EBITDA margin of 26% – this company is still trading at a relatively discounted price.
Prior to Jablonsky, they were highly overlevered with a totally incoherent business strategy, and the stock was a veritable dumpster fire as a result. But now Jablonsky has them reducing debt, reducing costs, and maintaining a cohesive strategy. Jablonsky only invests in areas where Maxar can be “the #1 or #2” player, and recent investments in Worldview Legion and Vricon have markets excited. They beat in Q2 and have been on a tear since. For confirmation of value: Michael Burry is an investor in Maxar.
Maxar Technlogies (MAXR) Moat & Growth:
Look to the Earth Intelligence segment. Earth observation is one of the most common ways to monetize space, and there is significant competition (eg. Planet, Airbus, etc.). Maxar distinguishes itself by owning the high resolution market (~30cm). For a nice visualization of why resolution matters, take a look at the gif for how AI/ML cv accuracy degrades with lower resolution images.
AI/ML is unlocking new applications for EO data. Data scientists are getting quite good at interpreting images and processing the massive amounts of data generated from satellite imagery. However, AI/ML itself evolves extremely rapidly, problems are “solved” and commoditized quickly. On top of its analytics software, Maxar owns the data generation market at the highest commercially available resolution – this makes them a platform that can deliver lasting value.
The Vricon acquisition will be a key driver to future growth. There is demand for 3D spatial models from both government (this is already an area of investment for IARPA – see CORE3D) and in the commercial space. By layering Vricon’s technology on Maxar’s massive imagery repository, they’ve unlocked a market opportunity that companies are desperately trying to compete in – Esri acquired nFrames in September to further develop their own 3D imaging capabilities. This tech should allow Maxar to capitalize on broader commercial trends like 5G and autonomous vehicles.
According to earnings the space infrastructure segment should deliver mid-single digit revenue growth. Frankly I’m less excited about this in the long-term (unprofitable, ~40% of revenue), but I do like the top-line growth it brings. Perhaps there is some type of advantage to developing worldview legion in-house. At any rate, I trust Jablonsky with it.
Should you buy Maxar Technoologies (MAXAR)?
Shares of Maxar Technologies (MAXR) appear to be a very good investment option, the Money Midnight Indicator is expecting its price to increase considerably in the next several months. The majority of the metrics point to this investment being highly attractive