Rocket Lab USA Inc. (RKLB)

Conclusion

Rocket Lab USA Inc. is a US space company. It provides launch services with its Electron rocket, develops the Neutron launch vehicle, and builds space systems and components. At 58.86 USD on 9 November 2026, the market capitalisation is 35.2 billion USD and the enterprise value is 33.1 billion USD.

The verdict is overvalued. Price-to-sales stands at 45.8 against a ten-year median of 22.5, a premium of 103.1%, and price-to-book stands at 10.1 against a median of 5.6, a premium of 80.3%. Earnings-based multiples are not available because earnings are negative. The fair value band runs from 24.65 to 36.97 USD with a midpoint of 30.81 USD, giving a margin of safety of -47.7% at the current price. The DCF gives no per-share value because free cash flow is negative. The growth implied by the price could not be derived from the data, but the company delivered revenue compound growth of 41.8% over three years and 76.5% over five.

What holds the case up is revenue growth, with five of six comparable years growing, and a current ratio of 5.48. The Altman Z-score of 30.75 also supports balance-sheet strength. What would break it is the return on capital: ROIC of -11.0% against a WACC of 17.4%, a ROIC minus WACC value of -28.4%. Dilution is the second weak point, with a five-year share count compound growth of 46.6%. Interest coverage of -24.7 is the third.

Financial health

Yellow: the balance sheet is strong on liquidity and net debt, but interest coverage is negative. The current ratio is 5.48 and the quick ratio is 4.81, both assessed good, and net debt to EBITDA is also assessed good, though its value is not reported. Debt to equity is only 0.04. Interest coverage is -24.7, assessed bad, because operating earnings are negative. The Altman Z-score is 30.75, in the safe zone, though the model was designed for manufacturers and so is only an approximate reading for this company. Insolvency risk: low, about 0.46% by the estimate of the Ohlson model over one to two years.

Earnings quality

Yellow: cash earnings and dilution weigh the picture down, while the accounting checks look clean. Free cash flow conversion is not available on either the trailing or the five-year basis. The accrual ratio is -1.9%, and the Beneish M-score of -2.11 points to an unlikely manipulation. The Piotroski score is 5 out of 9. Stock-based compensation equals 10.6% of revenue, and free cash flow after it is -452.7 million USD. The five-year share count compound growth of 46.6% shows heavy dilution rather than buybacks. Over the last eight quarters the company beat estimates four times and missed three times, with an average surprise of 11.1%. Estimate revisions are negative: the current year has 2 downward and no upward revisions, and the next year has 4 downward against 1 upward.

Profitability

Red: margins are negative, and returns fall well short of the cost of capital. The gross margin is 37.3% against a ten-year median of 9.0%, a clear improvement. The operating margin is -29.1% against a median of -68.0%, and the net margin is -21.5% against a median of -64.4%. Both margins are assessed as good relative to their history but bad in absolute terms. ROIC is -11.0% against a WACC of 17.4%, and the ROIC minus WACC value is -28.4%, so the company is destroying value. Return on equity is -4.7%. The DuPont split shows a net margin of -32.9%, an asset turnover of 0.26 and an equity multiplier of 1.35, so leverage is not inflating the return.

Growth

Green: revenue growth is strong and consistent across the periods reported. Revenue compound growth is 41.8% over three years and 76.5% over five. Revenue grew in five of the six comparable years. Ten-year revenue growth is not available. Earnings per share growth is not available for the historical periods. Analysts expect next-year earnings per share growth of 225.3%, but estimate revisions have been negative, so the forecast has weakened recently. Growth is the strongest part of the case, but it has not yet reached profitability.

Valuation

Red: the price is well above every fair value measure available. Price-to-sales is 45.8 against a ten-year median of 22.5, a premium of 103.1%. Price-to-book is 10.1 against a median of 5.6, a premium of 80.3%. The fair value band runs from 24.65 to 36.97 USD with a midpoint of 30.81 USD, and the margin of safety is -47.7% at a price of 58.86 USD. The fair value from historical multiples is also 30.81 USD. The DCF uses a discount rate of 17.4% and a terminal growth rate of 2.5%, but it gives no per-share value because free cash flow is negative. The reverse DCF implied growth is not available. The company pays no dividend, so the forward yield is zero. The fair value is an order of magnitude built on fixed assumptions, not a price target.

Risks

The main risk is that the company keeps destroying value while dilution continues. ROIC of -11.0% against a WACC of 17.4% means each unit of capital currently earns less than its cost. A five-year share count compound growth of 46.6% dilutes existing holders, and stock-based compensation of 10.6% of revenue shows the cost of pay. Negative interest coverage of -24.7 and negative free cash flow mean that the balance sheet depends on the cash reserves, which the current ratio of 5.48 supports for now. Estimate cuts of 4 against 1 for next year signal rising doubt about profit recovery.

Several values are not available: free cash flow conversion, the DCF per-share value, the reverse DCF implied growth, earnings-based multiples and the ten-year revenue growth. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot judge refinancing timing or which business lines drive growth.