Canadian Stock Plummets 52%: A Buy-and-Hold Opportunity
After a significant drop of 52%, Canadian stock MDA Space (TSX: MDA) raises questions about its future. However, recent data indicates that this space-tech company might present a notable buy-and-hold opportunity for investors.
Overview of MDA Space
Headquartered in Toronto, MDA Space is a key player in the global space economy. The company specializes in advanced technology for satellites, robotics, and geointelligence systems. As of now, its stock is trading at $23.25 per share, resulting in a market capitalization of approximately $2.9 billion.
Stock Performance
MDA Space’s stock has experienced a downturn of more than 50% from its 52-week high. Nevertheless, looking back over three years, the stock is still up by an impressive 266%. This long-term growth suggests that the recent decline may be a healthy correction in a robust upward trend.
Revenue Growth
In Q3, MDA Space reported a substantial 45% year-over-year increase in revenue, totaling $409.8 million. Much of this growth stemmed from its Satellite Systems and Robotics & Space Operations divisions. Specifically:
- Satellite Systems: Generated $283.5 million, demonstrating a 69% year-over-year growth.
- Adjusted EBITDA: Increased by 49% year-over-year, reaching $82.8 million, with a 20.2% margin.
These results align with the company’s full-year guidance, reaffirmed during its November earnings event.
Future Outlook
As of the end of Q3, MDA’s backlog was an impressive $4.4 billion, indicating strong future revenue visibility. Although the cash flow dipped to $33 million due to working capital changes, the balance sheet remains stable with net debt at just 0.3 times its trailing 12-month adjusted EBITDA.
Recent Developments
MDA recently completed the acquisition of SatixFy Communications, enhancing its digital satellite capabilities. The company also demonstrated its AURORA system’s ability to support fast broadband and 5G communication from space.
Conclusion: A Potential Buy-and-Hold Opportunity
Despite the current 52% drop in stock price, MDA Space is performing well operationally. Its strong growth metrics and favorable market dynamics suggest an encouraging long-term outlook. Investors with a patient mindset may find this a rare chance to invest in a promising business while it is still undervalued.
