Rocket Lab Stock Advances 74% in 3 Months: Time to Take Profits?
Shares of Rocket Lab CorporationRKLB have surged 74% over the past three months, outperforming the Zacks Aerospace-Defense Equipment industry’s rise of 0.5%. However, the company remains exposed to Neutron development delays, supply-chain constraints and uncertainties tied to U.S. government programs, which could affect backlog conversion, revenue timing, margins and overall financial performance.
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In contrast, some stocks from the same industry, such as Curtiss-Wright CorporationCW and Leonardo DRS, Inc.DRS, have also outperformed the industry during the same period. Shares of CW and DRS have risen 6.5% and 8.8%, respectively.
With RKLB shares rallying over the past three months, investors may hold varied perspectives. Let's examine the factors and assess the stock's investment prospects to make an informed decision.
Key Risks for RKLB
Rocket Lab reiterated that Neutron remains on track for its first launch later in 2026, though the timeline remains demanding due to ongoing engine testing, qualification work and recovery system development. Initial launches are also expected to generate lower margins as the vehicle and related systems mature. Any development or testing delays could postpone revenue growth and keep losses and cash usage elevated, which may weigh on the company’s financial performance.
Rocket Lab continues to face supply-chain and component availability challenges across its large space systems business, particularly related to optical terminals and other critical mechanisms. While acquisitions such as Motiv and Mynaric are expected to expand in-house capabilities, integrating and scaling these operations may take time. Delays in component availability or production ramp-ups could slow backlog conversion and shift revenues and cash inflows across quarters, potentially increasing volatility.
A large portion of the backlog is linked to U.S. government programs, exposing the company to budget uncertainties, procurement delays and policy changes. Regulatory approvals may add further execution risks, while any delays in program timelines could affect revenue recognition and increase dependence on external government decisions.
What’s Working in RKLB’s Favor?
Rising national security demand continues to expand Rocket Lab’s role across hypersonics, missile defense and responsive launch programs. In first-quarter 2026, the company signed 31 new Electron and HASTE launch contracts and secured five dedicated Neutron launches, taking its total contracted launch manifest to more than 70 missions.
Rocket Lab also won a $30 million contract for three dedicated HASTE missions for Anduril, with the first launch expected within 12 months, while recent Golden Dome-related work further strengthened its defense exposure. The steady flow of launch contracts is expected to support recurring revenues, improve mission cadence and strengthen long-term growth visibility.
Earnings Estimates for RKLB Stock
The Zacks Consensus Estimate for RKLB’s 2026 earnings per share (EPS) indicates a decline of 11.11% over the past 60 days.
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The Zacks Consensus Estimate for Curtiss-Wright’s 2026 EPS calls for a rise of 0.33% in the past 60 days. The estimate for Leonardo DRS’ 2026 EPS indicates an increase of 0.79% over the same period.
RKLB Stock’s Poor ROIC
The image below shows that RKLB stock’s trailing 12-month return on invested capital (ROIC) not only lags the peer group’s average return but also reflects a negative figure. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.
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Liquidity Position of RKLB
RKLB has a current ratio of 4.48 compared with its industry’s average of 2.17. The ratio, being more than one, indicates that RKLB possesses sufficient capital to pay off its short-term debt obligations.
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Its industry peers, Curtiss-Wright and Leonardo DRS, also maintain current ratios above one. CW has a current ratio of 1.52, while DRS holds 1.86.
RKLB Stock Trades at a Premium
Rocket Lab is currently trading at 68.28X, a premium compared to its industry’s 12.09X on a forward 12-month Price/Sales basis.
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What Should an Investor Do?
Despite Rocket Lab’s expanding role in national security and launch programs, its near-term outlook remains uncertain due to Neutron development risks, supply-chain challenges and dependence on government contracts. The stock has significantly outperformed the industry in recent months and is currently trading at a steep premium valuation relative to peers. With earnings estimates trending lower and ROIC remaining negative, investors may consider avoiding the stock at current levels.
RKLB currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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