One-glance verdict
Within fair range
$-74.41 our estimate vs market $48.59
165% below our estimate
Fundamentals snapshot
Telesat Corporation
TSAT · NMS · Technology · Communication Equipment
Current price
$48.59
52-week range
$23.01 - $61.54
Market cap
$2.50B
Balance sheet
Distressed
0.26x Concerning
Net debt $2.48B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
3 Risks
1 rewards · 3 risks
- Reward Free cash flow was positive in 2/10 years.
- Risk Return on equity was -73.0% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 39.0% to -15.1% over 3 years.
- Risk Net debt grew 37.1% over 3 years.
What this company does
Telesat Corporation
Telesat operates a fleet of satellites that provide internet and video services to businesses and governments in hard-to-reach places, like on airplanes, ships, or in remote communities. The company makes most of its money by leasing out satellite capacity to big clients like TV broadcasters and telecom companies, which often results in predictable recurring revenue (income that is stable and likely to continue in the future). This is important because Telesat provides vital communication links for industries and people who can't rely on traditional ground-based networks.
How the company got here
Telesat was founded in 1969 by the Canadian government to provide satellite communications across the country's vast and remote areas. A key moment was the 1972 launch of Anik A1, the world's first domestic communications satellite in a fixed orbit, which was a game-changer for television and telephone services in Canada. The company was privatized in the 1990s and has since grown into one of the world's largest satellite operators. Now, it's making a major pivot from its traditional business to build a new, advanced network of satellites closer to Earth.
What it actually does
Think of Telesat as a company that owns and operates a fleet of satellites orbiting the Earth. These satellites act like very tall cell towers in space, receiving signals from the ground and bouncing them back down to other locations. This allows for communication services like television broadcasts, internet access, and private data networks for businesses and governments, especially in places where it's difficult to lay physical cables. They sell access to their satellite network to other large companies, who then provide services directly to consumers and organizations.
Geostationary (GEO) Satellites
This is Telesat's long-standing and traditional business. It operates a fleet of satellites in a high, geostationary orbit (meaning they stay fixed over one spot on Earth). These are primarily used for services that require broad coverage, like broadcasting television signals to entire continents for cable and satellite TV providers. This segment also provides connectivity for large enterprises, governments, and industries like aviation and maritime. While it has been the company's main source of revenue, this business is currently facing a decline as some contracts are not being renewed and satellites age.
Low Earth Orbit (LEO) Satellites
This is the future focus of the company, a new network called Telesat Lightspeed. These satellites orbit much closer to the Earth than the GEO fleet, which dramatically reduces the time it takes for a signal to travel to space and back, a delay known as latency (the lag you might experience on a video call). This segment is designed to provide high-speed, fiber-like internet and data services to enterprise and government customers, including telecommunication companies, and for use in airplanes and ships. While this business is not yet generating significant revenue, it represents a major growth opportunity for Telesat.
What management is betting on now
Management is heavily invested in the success of its new Telesat Lightspeed network. The strategy is to build a state-of-the-art LEO satellite constellation to provide high-speed, low-latency (minimal delay) internet and data services to businesses and governments worldwide. They are specifically targeting enterprise customers who need reliable, high-performance connectivity in areas without good ground-based options, such as for connecting remote offices, airplanes, and ships. A key part of this strategy is also to provide secure and sovereign communication services for national defense and government agencies, particularly in the Arctic.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $-74.41 vs current price $48.59
Our most-likely fair value is $-74.41 a share — about 253.1% away from today's price of $48.59, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $2.5B. Interest coverage 0.3x.
Net debt
$2.48B
Interest coverage
0.26x
Telesat Corporation's profit covers its interest bill about 0.3 times over. and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
TSAT
BASELINE
Telesat Corporation
Total debt $2.75B Interest coverage 0.26x This is the baseline the peer rows are being compared against.
Total debt $1.79B Interest coverage 2.67x +921% vs TSAT Carries about 10.2x more debt cushion than TSAT.
Total debt $6.93B Interest coverage 0.30x +15% vs TSAT Has roughly the same debt cushion as TSAT.
Total debt $419.15M Interest coverage 0.36x +37% vs TSAT Carries about 1.4x more debt cushion than TSAT.
Total debt $2.99B Interest coverage -7.98x -100% vs TSAT This peer has almost no interest-payment cushion compared with TSAT.
What you should know
The case for and against TSAT
1 Reward
3 Risks
Rewards
-
Free cash flow was positive in 2/10 years.
Risks
-
Return on equity was -73.0% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 39.0% to -15.1% over 3 years.
-
Net debt grew 37.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
-6.67x
P/B
2.72x
P/S
6.90x
EV/EBITDA
37.12x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
38.8%
Operating margin
-15.1%
Net margin
-102.9%
ROE
-73.0%
ROA
0.0%
Health
Liquidity and balance-sheet strength
Debt / equity
3.24x
Current ratio
0.17x
Quick ratio
0.11x
Total debt
$2.75B
Total cash
$274.96M
Growth
How the business has been compounding
Revenue TTM
$259.47M
Revenue 5Y CAGR
-18.0%
EPS TTM
-18.13
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$47.86M
Free CF TTM
$-52.96M
FCF margin
-20.4%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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