Iridium (IRDM): Buy, Sell, or Hold Post Q2 Earnings?

Iridium has gotten torched over the last six months - since April 2025, its stock price has dropped 25.9% to $18.03 per share. This was partly driven by its softer quarterly results and might have investors contemplating their next move.

Is there a buying opportunity in Iridium, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free for active Edge members.

Why Is Iridium Not Exciting?

Despite the more favorable entry price, we're cautious about Iridium. Here are three reasons there are better opportunities than IRDM and a stock we'd rather own.

1. Fewer Distribution Channels Limit its Ceiling

With $857.5 million in revenue over the past 12 months, Iridium is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Iridium’s revenue to rise by 4.1%, close to its 8.5% annualized growth for the past five years. This projection doesn't excite us and suggests its newer products and services will not accelerate its top-line performance yet.

3. Previous Growth Initiatives Haven’t Impressed

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Iridium historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 4.8%, lower than the typical cost of capital (how much it costs to raise money) for business services companies.

Final Judgment

Iridium isn’t a terrible business, but it doesn’t pass our bar. After the recent drawdown, the stock trades at 16.4× forward P/E (or $18.03 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d recommend looking at our favorite semiconductor picks and shovels play.

Stocks We Would Buy Instead of Iridium

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