MDA Ltd. (MDA.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

MDA Ltd.designs, manufactures, and services space robotics, satellite systems and components, and intelligence systems in Canada, the United States, Europe, Asia, the Middle East, and internationally.It offers geointelligence solutions that provide satellite-generated imagery and analytic services to deliver critical and value-added insights in the areas of national security, climate change monitoring, and maritime surveillance.

The company also provides robotics and space operations that enable humanity's exploration by providing autonomous robotics and vision sensors that operate in space and on the surfaces of the moon and mars.In addition, it offers satellite systems and spacecraft to enable space-based services, including space-based broadband internet connectivity from low earth orbit satellite constellations.Further, the company provides products and services of defense intelligence systems.

It serves government agencies, prime contractors, and space companies.The company was formerly known as Neptune Acquisition Holdings Inc.and changed its name to MDA Ltd.

in March 2021.MDA Ltd.was founded in 1969 and is headquartered in Brampton, Canada.

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1.b. Last Insights on MDA

MDA Space's recent performance has been impacted by several factors. The company's loss of a $1.8 billion contract with EchoStar Corporation, announced by RBC, has raised concerns about its growth potential. Additionally, a possible shareholder class action investigation by Siskinds LLP, related to the company's disclosure about the EchoStar contract, has added uncertainty. The upcoming release of MDA Space's third-quarter 2025 financial results on November 14, 2025, may also influence investor sentiment. A price target raise to $53 by RBC priorily may contrast with these negative drivers.

1.c. Company Highlights

Last Price	39.58
Change Percentage	1.49%
Open	39.5
Previous Close	39
Market Cap ( Millions)	4998
Volume	904419
Year High	48.31
Year Low	20.22
M A 50	32.18
M A 200	33.06

FCF Yield	10.95%
Dividend Yield	0.00%
ROE	8.76%
Debt / Equity	32.45%
Net Debt / EBIDTA	100.77%
Price To Book	3.74
Price Earnings Ratio	45.3
Price To FCF	9.13
Price To sales	3.38
EV / EBITDA	22.39

2. MDA Space's Q3 Earnings: A Strong Performance

MDA Space reported a robust Q3 2025, with revenues totaling $410 million, up 45% year-over-year, and adjusted EBITDA of $83 million, up 49% year-over-year, resulting in an adjusted EBITDA margin of 20.2%. Earnings per share (EPS) came in at $0.35, slightly below estimates of $0.4. The company's financial performance was driven by strong growth across its business areas, with a significant increase in revenue and profitability.

Publication Date: Nov -20

                                    📋 Highlights
                                    Q3 Revenue & EBITDA Growth::
                                                Revenue reached $410M (+45% YoY), adjusted EBITDA $83M (+49% YoY) with 20.2% margin.
Backlog Visibility::
                                                $4.4B backlog (down $185M YoY) provides revenue visibility for 2025–2026+.
2025 Full-Year Outlook::
                                                Revenue $1.57B–$1.63B (+48% growth midpoint), adjusted EBITDA $305M–$320M (+45% growth midpoint).
Opportunity Pipeline::
                                                $20B total pipeline, with $13B in Satellite Systems (LEO constellations, broadband satellites).
Free Cash Flow Status::
                                                Negative $37M (Q3), excluding growth CapEx: $26M; 2025 guidance remains neutral/positive.

                                

Backlog and Revenue Visibility

The company's backlog stood at $4.4 billion at quarter-end, providing revenue visibility for 2025 and 2026 and beyond. The backlog decrease of $185 million compared to the same period last year was driven by continued conversion of backlog into revenue. MDA Space's CEO, Mike Greenley, highlighted the company's strong backlog, stating that it provides "revenue visibility for 2025 and 2026 and beyond."

Business Area Performance

The company's Satellite Systems business area is advancing multiple requests for communication satellite solutions, with a growing number of constellation projects from multiple markets and geographies. Robotics & Space Operations made solid progress on the Canadarm3 program and was selected to conduct an early phase study for Canada's proposed Lunar Utility Vehicle. Geointelligence saw robust customer demand for its Earth observation offering, with notable awards including two contracts to equip the Royal Canadian Navy's Halifax-class ships.

Valuation and Outlook

With a P/E Ratio of 24.51 and an EV/EBITDA of 12.18, the market appears to be pricing in a certain level of growth. Analysts estimate next year's revenue growth at 11.4%, which may not be fully reflected in the current valuation. MDA Space reaffirmed its previous 2025 full-year outlook, expecting revenues to be between $1.57 billion and $1.63 billion, representing year-over-year growth of approximately 48% at the midpoint of guidance.

Free Cash Flow and Capital Allocation

The company's free cash flow was negative $37 million in Q3, primarily due to working capital fluctuations. However, excluding growth CapEx, free cash flow was $26 million. MDA Space expects full-year free cash flow to be neutral to positive. The company's capital allocation strategy remains focused on pursuing supply chain opportunities and expanding into new regions.

3. NewsRoom

Vast Takes a Giant Leap Towards Building a Private Space Station

Feb -21

Source:

MDA Space launches defence company with eye on 'multi-billion-dollar' contracts

Feb -19

Source:

MDA Space Formally Launches 49North Subsidiary, With Joe Armstrong as President

Feb -19

Source:

MDA Space Launches 49North, a Canadian defence business delivering multi-domain and mission-critical capabilities

Feb -19

Source:

MEDIA ADVISORY - MDA SPACE TO HOLD ITS FOURTH QUARTER 2025 EARNINGS CONFERENCE CALL ON MARCH 4, 2026

Feb -10

Source:

How MDA Space’s Hanwha K-LEO MoU (TSX:MDA) Has Changed Its Investment Story

Jan -27

Source:

Assessing MDA Space (TSX:MDA) Valuation After A Strong 36% One Month Share Price Return

Jan -27

Source:

MDA SPACE AND HANWHA SIGN MOU TO PURSUE KOREAN MILITARY CONSTELLATION PROGRAM

Jan -26

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Satellite Systems

Expected Growth: 8.37%

MDA Ltd.'s Satellite Systems segment growth of 8.37% is driven by increasing demand for Earth observation and satellite-based services, expansion into new markets, and strategic partnerships. Additionally, investments in R&D, cost savings initiatives, and a strong order backlog contribute to the segment's growth.

Robotics and Space Operations

Expected Growth: 10.4%

MDA Ltd.'s Robotics and Space Operations segment growth of 10.4% is driven by increasing demand for satellite-based services, government investments in space exploration, and adoption of automation and robotics in industries such as manufacturing and logistics. Additionally, the company's diversified portfolio of space-based solutions and strategic partnerships contribute to its growth momentum.

Geointelligence

Expected Growth: 12.47%

MDA Ltd.'s Geointelligence segment growth of 12.47% is driven by increasing demand for satellite-based surveillance and monitoring, expansion into new markets, and strategic partnerships. Additionally, advancements in AI and machine learning are enhancing the accuracy and efficiency of geospatial data analysis, further fueling growth.

7. Detailed Products

Geospatial Analytics

MDA Ltd.'s Geospatial Analytics provides advanced data analytics and insights to help organizations make informed decisions. It offers a range of services, including data integration, data visualization, and predictive analytics.

Earth Observation

MDA Ltd.'s Earth Observation provides high-resolution satellite imagery and data to support a wide range of applications, including land use mapping, natural resource management, and environmental monitoring.

Robotics and Automation

MDA Ltd.'s Robotics and Automation offers customized robotic solutions for various industries, including manufacturing, healthcare, and aerospace.

Satellite Communications

MDA Ltd.'s Satellite Communications provides secure and reliable communication services, including satellite-based broadband, narrowband, and broadcast solutions.

Intelligence, Surveillance, and Reconnaissance (ISR)

MDA Ltd.'s ISR solutions provide advanced sensing and surveillance capabilities for defense, security, and commercial applications.

8. MDA Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for MDA Ltd. is medium due to the availability of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of a large number of customers who can easily switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of multiple suppliers in the market, giving MDA Ltd. the power to negotiate prices.

Threat Of New Entrants

The threat of new entrants is medium due to the moderate barriers to entry in the industry, such as regulatory requirements and capital investments.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established competitors in the market, leading to a competitive pricing strategy.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	29.70%
Debt Cost	3.95%
Equity Weight	70.30%
Equity Cost	4.64%
WACC	4.44%
Leverage	42.25%

11. Quality Control: MDA Ltd. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Magellan Aerospace

A-Score: 5.9/10

Value: 5.4

Growth: 4.8

Quality: 5.5

Yield: 3.0

Momentum: 10.0

Volatility: 6.7

1-Year Total Return ->

Park Aerospace

A-Score: 5.2/10

Value: 0.9

Growth: 2.4

Quality: 6.5

Yield: 6.0

Momentum: 9.5

Volatility: 6.0

1-Year Total Return ->

Cadre Holdings

A-Score: 5.1/10

Value: 2.6

Growth: 6.4

Quality: 6.1

Yield: 2.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

Héroux-Devtek

A-Score: 4.4/10

Value: 4.0

Growth: 4.7

Quality: 4.6

Yield: 0.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

MDA

A-Score: 4.2/10

Value: 5.2

Growth: 9.3

Quality: 5.8

Yield: 0.0

Momentum: 2.0

Volatility: 2.7

1-Year Total Return ->

VirTra

A-Score: 3.2/10

Value: 4.7

Growth: 5.9

Quality: 5.8

Yield: 0.0

Momentum: 0.5

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-8.54%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.44%

MDA Ltd. - CA55292X1087

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on MDA

1.c. Company Highlights

Strong Momentum

Average Growth

Average Yield

Earnings Beats

Revenues Miss

Earnings Miss

Revenues Beats

Stable Momentum

Average Quality

Expensive

Fairly Valued

Higher Growth

Medium Volatility

2. MDA Space's Q3 Earnings: A Strong Performance

Backlog and Revenue Visibility

Business Area Performance

Valuation and Outlook

Free Cash Flow and Capital Allocation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Satellite Systems

Expected Growth: 8.37%

Robotics and Space Operations

Expected Growth: 10.4%

Geointelligence

Expected Growth: 12.47%

7. Detailed Products

Geospatial Analytics

Earth Observation

Robotics and Automation

Satellite Communications

Intelligence, Surveillance, and Reconnaissance (ISR)

8. MDA Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: MDA Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

39.58$

Current Price

39.58$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA