Businesses are increasingly turning to satellite communication (SATCOM) to make their operations more efficient. In addition, companies with operations in distant areas rely heavily on satellite communication to provide real-time asset and facility monitoring.
However, pandemic-induced business disruptions are still impeding the SATCOM industry. Consequently, industry participants are not only concerned about technological advancement but also regulatory decisions, standards and protocols, capital financing, and consumer-oriented digital market dynamics.
Despite the concerns surrounding the SATCOM industry’s growth prospects, shares of Iridium Communications Inc. (IRDM), Globalstar Inc. (GSAT), and AST SpaceMobile Inc. (ASTS) skyrocketed in price based on rumors that Apple, Inc.’s (AAPL) recently launched iPhone 13 will be satellite compatible. However, mobile analysts and communication specialists eventually refuted the speculation, resulting in a trend reversal for these stocks. So, we think it could be wise to avoid these fundamentally weak SATCOM stocks.
Iridium Communications Inc. (IRDM)
IRDM in McLean, Va., provides mobile voice and data communications products and services to companies, government agencies in the United States, non-governmental organizations, and consumers internationally. The company’s products and services include postpaid and prepaid mobile voice and data satellite communications, push-to-talk, broadband data, and the Internet of Things (IoT).
IRDM’s operating expenses increased 3% year-over-year to $138.32 million in the second quarter, ended June 30, 2021. The company’s net loss came in at $1.35 million for the six months ended June 30, 2021.
Moreover, IRDM’s EPS estimate is expected to remain negative in the current year. While IRDM’s shares have climbed 10.8% in price year-to-date, the stock has tumbled 7.3% over the past five days.
IRDM’s POWR Ratings are consistent with this bleak outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
IRDM has a D grade for Value, and a C for Growth and Stability. Within the C-rated Air/Defense Services industry, it is ranked #33 of 64 stocks.
To see additional POWR Ratings for Quality, Sentiment, and Momentum for IRDM, click here.
Globalstar Inc. (GSAT)
GSAT provides mobile satellite services worldwide. The company offers duplex two-way phone and data products and mobile voice and data satellite communications services and equipment. In addition, it sells wholesale minutes to independent gateway operators (IGOs) and offers technical services such as hardware and software design for custom applications. GSAT is headquartered in Covington, La.
For the second quarter, ended June 30, 2021, GSAT’s revenue decreased marginally year-over-year to $30.28 million. Its operating loss increased 4.1% from its year-ago value to $16.01 million. The company reported a $21.45 million net loss, while its loss per share came in at $0.01 over this period.
The company's EPS is expected to remain negative in the current year. In addition, GSAT’s revenue is expected to decline 8.3% year-over-year to $117.8 million in the current year. Although GSAT's stock has surged 399.1% in price year-to-date, it has declined 25.9% over the past five days.
GSAT’s weak fundamentals are reflected in its POWR ratings. The stock has an overall D rating, which equates to Sell in our POWR Ratings system. The stock also has an F grade for Value. In the F-rated Telecom – Domestic industry, it is ranked #17 of the 21 stocks.
In addition to the POWR Ratings grades I have just highlighted, one can see the GSAT rating for Momentum, Growth, Stability, Quality, and Sentiment here.
AST SpaceMobile Inc. (ASTS)
ASTS runs a space-based cellular broadband network for mobile phones. The Midland, Tex., concern’s SpaceMobile service provides mobile broadband services for users traveling on land, at sea, or in-flight in and out of areas without terrestrial mobile coverage.
During the second quarter, ended June 30, 2021, ASTS’ total operating expenses surged 348.6% year-over-year to $25.10 million. The company’s net loss increased 257.5% from the year-ago value to $65.17 million. Its loss per share came in at $0.39 over this period.
Analysts expect its EPS to decline 97% year-over-year to $0.65 next year. The stock has soared 37.2% in price over the past month but has declined 3.6% over the past five days.
ASTS’ poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system.
It also has an F grade for Value and Stability, and a D for Growth. ASTS is ranked last of 21 stocks in the same industry.
Click here to see the additional POWR Ratings for ASTS (Quality, Sentiment, and Momentum).
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IRDM shares were unchanged in premarket trading Tuesday. Year-to-date, IRDM has gained 10.77%, versus a 17.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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