/VirginGalactic-bfba209d71764412a26ca569f9237cdd.jpg)
Key Takeaways
- Analysts estimate adjusted EPS of -$0.31 vs. -$0.37 in Q4 FY 2019.
- Consensus estimates predict soaring revenue for Q1 and fiscal year 2021.
- Revenue is expected to be flat in Q4 FY 2020 compared to a year earlier amid postponed or unsuccessful test flights.
Virgin Galactic Holdings Inc. (SPCE), the commercial space tourism company founded by billionaire Sir Richard Branson, has faced an uphill battle in recent months. COVID-19 has set back the company’s operations schedule, and technical concerns forced it to postpone test flights in December and again in February. That’s added new urgency given that company has posted no revenue for the past two reported quarters as it invests in additional test flights.
Given all of these variables, investors will watch closely for any sign of progress when Virgin Galactic reports earnings on February 25, 2021 after market close for Q4 FY 2021. Analysts expect revenue to remain flat year-over-year (YOY) as adjusted losses per share narrow slightly relative to Q4 FY 2019.
Investors will also listen closely to Virgin Galactic’s outlook for future performance. A key metric to look at will be the company’s Q1 FY 2021 and full year FY 2021 guidance. For their part, analysts predict dramatic revenue growth and smaller adjusted losses per share (EPS) for both Q1 and full year FY 2021.
Virgin Galactic’s ultimate goal is to make money by providing commercial space flights and services to tourists and researchers. But the ongoing uncertainty about Virgin Galactic’s test flights has contributed to major swings in the company’s stock and to its underperformance for most of the past year. As the COVID-19 pandemic took hold in early 2020, Virgin Galactic shares fell more dramatically than the market and failed to recover for most of 2020. The stock began to stage an advance in November, then drifted back, and finally took off in January, surpassing the broader market. As a result, the stock has posted a total return of 37.5% over the past 12 months, ahead of the S&P 500’s total return of 20.2%.
Source: TradingView.
Since going public in October of 2019, Virgin Galactic has yet to post a quarter of positive adjusted EPS. Adjusted earnings per share have fluctuated between -$0.37 in Q4 FY 2019 and -$0.30 in Q1 and Q2 FY 2020. Analysts expect the company to report adjusted EPS of -$0.31 for Q4 FY 2020, which amounts to a slightly smaller loss than the same quarter a year earlier.
Virgin Galactic’s quarterly revenue has varied widely since the company went public. Revenue plunged from $1.8 million in Q1 FY 2019, before it went public, to $0.5 million by Q4 FY 2019. Then it fell again to $0.2 million in revenue for Q1 FY 2020, and it posted no revenue whatsoever in Q2 and Q3. Analysts now estimate revenue of $0.5 million for Q4 FY 2020. That would be flat YOY, but the highest quarterly performance for FY 2020.
| Virgin Galactic Key Metrics | ||||
|---|---|---|---|---|
| Estimate for Q1 FY 2021 | Estimate for Q4 FY 2020 | Actual for Q4 FY 2019 | Actual for Q4 FY 2018 | |
| Adjusted Earnings Per Share ($) | -0.24 | -0.31 | -0.37 | -0.24 |
| Revenue ($M) | 1.8 | 0.5 | 0.5 | 1.3 |
Source: Visible Alpha
As mentioned above, investors also will look for Virgin Galactic’s guidance for Q1 and full year FY 2021. Virgin Galactic is operating in an industry that is evolving rapidly, and the company has been focusing on test flights in recent quarters. Guidance by Virgin Galactic’s management in the Q4 earnings report could give investors a better picture of whether Virgin Galactic is on the path to sustained growth.
Until then, analyst estimates can give investors a picture of what may lie ahead. Analysts expect that Virgin Galactic’s losses on an adjusted EPS basis will continue to get smaller. They estimate adjusted EPS of -$0.24 for Q1 and -$0.65 for the year. Given that full-year estimates for adjusted EPS for FY 2020 are -$1.23, this marks a significant improvement.
Consensus estimates for revenue show increasing strength. Analysts estimate revenue of $1.8 million for Q1 FY 2021, about 9 times bigger than the same quarter a year earlier. Analysts also expect revenue growth to be strong for the full year, increasing about 30-fold to $20.7 million. For investors, a big issue is exactly when the company will be able to grow enough revenue to finally turn a profit.
