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From the Survey: Orbital Sciences
For those who have not heard of it, Orbital Sciences (ORB) may be best known for a $1.9 billion NASA contract it won to transport cargo to the International Space Station from 2011-2015. This came after NASA retired the Space Shuttle program in 2011. Orbital Sciences is based in Dulles, Virgina, not far from NASA headquarters in Washington D.C., and, investors can buy a share of this space station supplier. Indicative of increasing constraints on the U.S. government’s budget, NASA now relies on Russia to transport people to the International Space Station, and corporations like Orbital to transport cargo. This company provides other launch vehicles and satellites as well that aid in man’s exploration of the great beyond, among other things.
Before going on to make a variety of products that regularly escape the Earth’s gravity and atmosphere, Orbital Sciences was an idea in business school. The company was founded in 1980 about a year before the first space shuttle took off, and was built on the ideas of David Thompson, Bruce Ferguson and Scott Webster at Harvard Business School. (After its founding 31 years ago, David Thompson, one of the original founders, became Chairman and CEO.) A business study by the founders won the Space Foundation Prize for Space Business Research from NASA in 1981, and Orbital Sciences eventually got seed capital in 1982 from a Texas businessman. In 1983, Orbital signed an agreement with NASA for the company's first space product.
The company went public on the NASDAQ in 1990. The stock hit an all-time high of almost $50 a share in 1998, a year in which the company did not even turn a profit. After another peak, the equity’s price entered a free fall, and hit its all-time low of about $1.50 a share in October of 2001. Since that time, revenue growth has been fairly steady, the company has been profitable, and the equity’s price has rebounded considerably. Presently, however, three-quarters of Orbital’s revenues are reliant on government contracts. With the U.S. government cutting budgets, including the space shuttle program, the company is actually playing a bigger role in American space exploration, and is a market leader in the commercialization of outer space.
One milestone in space’s commercialization is Orbital Sciences’ Pegasus rocket, the world's first privately-developed space launch vehicle. This vehicle boasts 37 successful launches out of 40 total, according to the company’s Web site. Orbital also recycles old NASA parts, combining them with Pegasus parts, to create the Minotaur and Taurus launch vehicles. It was the Taurus launch system, carrying the Cygnus spacecraft, that was chosen by NASA to supply the International Space Station under the so-called Commercial Orbital Transportation Program. It faced competition for this contract from space transport companies such as SpaceX, Andrews Space, PlanetSpace , and Spacehab, which is a division of Astrotech (ASTC), as well bigger Aerospace names, such as Boeing (BA - Free Boeing Stock Report) and Lockheed Martin (LMT).
Orbital’s faces technical challenges, as well. In March of this year, a Taurus XL rocket failed to bring the Glory satellite, also built by Orbital, into orbit and ended up in the southern Pacific Ocean instead. This was the only failure for the U.S. space program in 2011 out of 18 orbital launches. (China had one failure out of 17 and, Russia, which had the most blast-offs, had 27 launches, with three failures.) The Glory satellite was meant to study global warming on Earth.
Elsewhere in our solar system, Dawn, Orbital’s first interplanetary spacecraft, is somewhere on what the company describes as its “eight year, three-billion-mile journey to the main asteroid belt between Mars and Jupiter.” In fact, it is orbiting Vesta, the second largest asteroid in our solar system and, according to updates on NASA’s Web site, it is about 2.5 astronomical units from the Earth. (An astronomical unit is about 150,000 kilometers.) Dawn recently sent back some close-up shots of Vesta, a somewhat more misshapen heavenly body compared to the more spherical planets in our solar system. NASA is exploring this proto-planet to learn more about our own planet’s evolution.
From helping to understand global warming and the origins of our solar system, to making sure the International Space Station is stocked, Orbital Sciences is taking part in some lofty pursuits. For a long term investor, envisioning Orbital’s potential business prospects requires the imagination of a science fiction writer. Satellites may become more intertwined with our daily life as location services, such as GPS or those found in social media, grow in popularity. Maybe Orbital can help find the next planet that can support life. As space tourism becomes a reality, Orbital may be blazing new trails into space as corporations establish commercial routes where governments first explored. For the time being, however, Orbital Sciences is still largely dependent on government contracts.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.