![]() Similarly, Blue Origin - winner of the rocket engine contract for Vulcan - might want to vertically integrate the company that buys its engines. Northrop Grumman might eye ULA's Vulcan rocket as a replacement for its own OmegA rocket, the development of which was canceled in 2021. Today, it's hard to see a buyer with a similar incentive to overpay for ULA. That contest gave Aerojet a big incentive to pay a high valuation to capture ULA - and its business. ![]() ULA was deciding between buying an Aerojet rocket engine - the AR-1 - and a competing BE-4 engine from Blue Origin to power its new Vulcan Centaur space rocket. Granted, back then Aerojet had an ulterior motive in bidding. so this is a rough guess based on the limited information available.Ĭoincidentally, "4x sales" was almost exactly the price offered for ULA eight years ago - when it was Aerojet Rocketdyne trying to buy it from Boeing and Lockheed Martin.īack then, ULA was doing only $492 million in annual sales, and Aerojet offered to buy the launch company for $2 billion cash - or 4.1 times sales. There are, of course, lots of other factors at play here - debt loads, free cash flow generation, etc. We could speculate that a P/E ratio as high as 36 times ULA's $200 million in fiscal 2022 profits - or about a $7.2 billion valuation for ULA. Given that Lockheed Martin's P/E ratio is about 22 right now and that ULA's operating profit is considerably higher. Indeed, if ULA earns stronger profit margins than Lockheed itself, it stands to reason that Lockheed would demand a premium to its own price-to-earnings (P/E) ratio to part with its stake. When you further consider that Lockheed Martin's own space business only earned an 8.8% operating profit margin last year (according to data from S&P Global Market Intelligence), a 15.4% margin looks pretty impressive. That equals $200 million total ULA operating profit on $1.3 billion in ULA revenue.) ![]() (Lockheed Martin's $100 million profit would be matched by another $100 million in profit going to ULA's other 50% owner, Boeing. Take that latter number with a grain of salt, because it's neither official nor audited - but if correct, it would imply a very healthy 15.4% operating profit margin for ULA. Here we find that Lockheed's "net earnings" from ULA in 2022 were "approximately $100 million." Lockheed did not disclose ULA's revenues for the year, but other financial data sites suggest ULA's 2022 revenue might have been in the neighborhood of $1.3 billion. ![]()
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