Assessing Telesat (TSAT) Valuation After Strong 1-Year Returns And Ongoing Losses

Why Telesat Stock Is On Investors’ Radar Now

Telesat (TSAT) has drawn attention after delivering annual revenue of US$388.27 million alongside a net loss of CA$185.31 million. This has prompted fresh questions about how the stock’s recent performance lines up with its fundamentals.

See our latest analysis for Telesat.

At a share price of US$52.01, Telesat has seen some heat come out of the stock in the very short term, with a 1-day share price return that declined 3.52% and a 7-day share price return that declined 4.83%. However, the 90-day share price return of 96.71%, year to date share price return of 78.36%, and a 1-year total shareholder return of 209.68% indicate strong momentum over a longer stretch.

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With Telesat still loss making and the stock up strongly over the past year, investors are rightly asking a simple question: is this satellite operator still trading below what its business might justify, or has the market already priced in future growth?

Price-to-Sales of 2.8x: Is It Justified?

At a last close of $52.01, Telesat is trading on a P/S of 2.8x, which sits above both peer and industry averages and points to a richer valuation than many telecom stocks.

The P/S ratio compares the company’s market value to its annual revenue and is often used for loss making businesses where earnings are not yet a useful yardstick. For Telesat, the current 2.8x figure reflects what the market is willing to pay for each dollar of its US$388.27 million in revenue, even though the company reported a net loss of CA$185.31 million.

Analysts estimating a fair P/S of 10.7x suggest the current ratio is far below the level that model points to. This is a wide gap. At the same time, Telesat screens as expensive against both the peer average P/S of 1.7x and the broader US Telecom industry average of 1.3x. This highlights how sentiment around its revenue profile is very different to many sector peers and could shift if the market moves closer to that higher fair ratio level.

Explore the SWS fair ratio for Telesat

Result: Price-to-Sales of 2.8x (OVERVALUED)

However, investors still face clear risks, including ongoing net losses of CA$185.31 million and heavy reliance on GEO revenue, which could pressure sentiment if expectations for growth become uncertain.

Find out about the key risks to this Telesat narrative.

Next Steps

With that mix of enthusiasm and concern in mind, take a moment to review the numbers for yourself and stress test your thesis against the 1 key reward and 3 important warning signs.

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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.

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