Ever wonder if Rocket Lab’s recent run-up makes it a bargain, or if you’ve missed your window? You’re not alone. There’s a lot more to the story than just a hot stock chart.
Rocket Lab’s stock has been on a wild ride, climbing 106.9% year-to-date and an eye-catching 249.4% over the last year. This comes despite a recent short-term dip of -15.8% in the past week.
Recent headlines have highlighted Rocket Lab’s successful satellite launches and new government contracts. These developments have fueled excitement about its growth trajectory and put the stock front and center for investors who are weighing its potential against the risks of a rapidly changing space sector.
Based on six key valuation checks, Rocket Lab scores 0 out of 6 for undervaluation. This begs the question: is there more beneath the surface? Let’s dive deep into how Rocket Lab is valued and consider if there might be smarter ways to spot opportunities others might miss.
Rocket Lab scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to their present value. This approach offers a way to strip out market noise and focus on underlying fundamentals.
For Rocket Lab, the DCF model begins with the company’s most recent Free Cash Flow, which stands at a negative $208.45 million. Analysts forecast negative cash flow to continue in 2026 but expect a turnaround by 2027, when Rocket Lab is projected to generate $58.55 million. From 2028 through 2035, subsequent years are based on growth rates extrapolated by Simply Wall St, not analyst reports. By 2035, projections reach $589.87 million in Free Cash Flow, though these further-out estimates should be treated with caution.
After crunching all these numbers, the model arrives at an intrinsic value of $17.75 per share. Despite the promising growth trajectory in future cash flows, Rocket Lab’s current share price overshoots this by a wide margin. The DCF model implies the stock is trading at a premium. Specifically, it is 190.9% overvalued versus its estimated worth.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Rocket Lab may be overvalued by 190.9%. Discover 881 undervalued stocks or create your own screener to find better value opportunities.
RKLB Discounted Cash Flow as at Nov 2025
The Price-to-Sales (P/S) ratio is particularly useful for evaluating high-growth companies that are not yet profitable, like Rocket Lab, since it focuses on revenue instead of earnings. For companies still investing heavily in future growth, P/S offers a clearer snapshot of value relative to current sales, sidestepping the volatility or negatives often seen in net income.
When assessing what a “normal” or “fair” P/S ratio should be, expectations for rapid revenue growth alongside company-specific risks often justify higher ratios. However, elevated ratios can also reflect excessive optimism and increase downside risk if growth slows or markets turn.
Currently, Rocket Lab’s P/S multiple stands at an exceptionally high 49.56x. This dwarfs both the Aerospace & Defense industry average of 2.98x and its peer group’s average of 12.62x. That is a steep premium over relevant benchmarks, suggesting investors have sky-high expectations for Rocket Lab’s future.
This is where the Simply Wall St Fair Ratio comes in. This proprietary metric factors in the company’s specific growth rate, profit margins, risks, industry context, and market cap. Unlike a basic industry average, the Fair Ratio is tailored to Rocket Lab’s unique circumstances and adjusts for realities that generic benchmarks may miss.
Rocket Lab’s Fair Ratio is assessed at 6.96x. Compared with its actual multiple of 49.56x, the difference is substantial. This suggests current pricing is well above what its underlying business fundamentals warrant.
Result: OVERVALUED
NasdaqCM:RKLB PS Ratio as at Nov 2025
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1404 companies where insiders are betting big on explosive growth.
Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple framework that lets you describe your perspective on a company by connecting the business story you believe in with concrete estimates for future revenue, profit margins, and fair value. Rather than just relying on numbers, Narratives help you connect your vision of Rocket Lab’s future (whether bullish or cautious) directly to a financial forecast and a fair price target.
This tool, available to millions of investors right on Simply Wall St’s Community page, makes it easy to track your thinking over time and refine your approach as conditions change. With Narratives, you can easily compare your estimated Fair Value to the current share price, making it clear when your story says to buy, hold, or sell. In addition, Narratives are dynamic and update automatically when big news or new earnings are released, always keeping your call relevant.
For Rocket Lab, some investors have a Narrative that expects the company could be worth as much as $60 per share if everything goes right with Neutron and market share, while others take a more conservative outlook and see fair value closer to $20 based on execution risks and competition.
For Rocket Lab however, we’ll make it really easy for you with previews of two leading Rocket Lab Narratives:
🐂 Rocket Lab Bull Case
Fair Value: $58.67
Current valuation: 12.0% undervalued versus this narrative (calculated as ((58.67 – 51.64) / 58.67) = 0.12)
Forecast revenue growth: 37.36%
Expanded vertical integration and end-to-end space solutions position Rocket Lab for major defense contracts and future margin growth, with strong cash and infrastructure investments supporting profitability after major launches.
High launch cadence, in-house satellite production, and reusable rocket development enable sustained multi-year revenue and backlog growth, leveraging industry tailwinds for recurring opportunities.
Key risks include high R&D and capital expenditures, execution on large contracts, and competition, but analyst consensus expects Rocket Lab to outperform with a consensus price target just above the current price.
🐻 Rocket Lab Bear Case
Fair Value: $31.72
Current valuation: 62.8% overvalued versus this narrative (calculated as ((51.64 – 31.72) / 31.72) = 0.628)
Forecast revenue growth: 30%
Rocket Lab’s growth story is tied to scaling up Neutron launches and vertically integrating throughout the space “backbone,” but significant capital and commercial execution risks remain.
Competition from SpaceX and the challenge of achieving positive net margins pose a threat. Success hinges on operational efficiency, cost control, and turning Neutron launches into recurring profit drivers.
The crowded commercial launch space and Rocket Lab’s need to balance rapid expansion with financial discipline make its current valuation difficult to justify compared to long-term fundamentals.
Do you think there’s more to the story for Rocket Lab? Head over to our Community to see what others are saying!
NasdaqCM:RKLB Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include RKLB.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com