Could Iridium Communications Stock’s Cash Flow Spark the Next Rally?

We think Iridium Communications (IRDM) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount.

Here is what’s going well for the company: Iridium’s Q3 2025 results demonstrated a 7% total revenue increase, fueled by commercial IoT subscriber growth and a 3% rise in service revenue. Key developments include new partnerships with Vodafone IoT and Deutsche Telekom for NTN Direct connectivity, and the recent launch of a miniature PNT ASIC to bolster GPS resilience. These strategic moves and product innovations are expected to drive future growth. The company projects over $300 million in free cash flow for 2025 and is committed to reducing its net leverage, targeting below 3.5 times OEBITDA this year. While full-year service revenue guidance was slightly tightened to approximately 3%, OEBITDA guidance was narrowed to a higher range. The current valuation discount and bearish stock performance, reflecting a steep year-to-date decline, appear influenced by competitive concerns, despite the company’s solid operational results and initiatives. The debt-to-equity ratio was 4.02 as of September 2025.

So what does this translate to? Let’s look at some figures.

• Cash Yield: Iridium Communications offers an impressive cash flow yield of 17.2%.
• Growing: Last 12 month revenue growth of 7.3% means that the cash pile is going to grow.
• Valuation Discount: IRDM stock is currently trading at 33% below 3-month high, 48% below 1-year high, and 58% below 2-year high.

Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders

Below is quick comparison of IRDM fundamentals with S&P medians.

If you want to see more details, read Buy or Sell IRDM Stock. Nevertheless, portfolio beats stock-picking every time. Consider what could long-term performance for your portfolio be if you combined 10% commodities, 10% gold, and 2% crypto with equities.

The Point? The Market Can Notice, And Reward

The below statistics are from “high FCF yield with growth and discount” selection strategy since 12/31/2016. The stats are calculated based on selections made monthly, and assuming that a stock once picked, can not be re-picked for next 180 days.

• Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
• Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods

In summary, we select stocks that have dropped, despite apparently healthy fundamentals, and offer high cash flow yield – so useful to consider, what is the risk?

Risk Quantified

IRDM isn’t immune to big drops. It fell 31% during the Global Financial Crisis and nearly 30% in the 2018 correction. The Covid pandemic hit it harder, around 44%, and the inflation shock took it down almost 47%. Even with solid fundamentals, this stock has shown it can take a serious hit when markets turn sour. Risk is real, no matter the upside.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read IRDM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.