Rakon (NZSE:RAK) Swings to Net Profit in H1 2026, Reinforcing Bullish Turnaround Narratives

Rakon (NZSE:RAK) just posted its H1 2026 results, reporting revenue of 62.004 million NZD and basic EPS of 0.0196 NZD. Looking back, the company has seen revenue go from 41.657 million NZD in H1 2025 to 66.756 million NZD in H2 2024 before reaching the latest figure. EPS moved from -0.046 NZD up to 0.018276 NZD, then to the current 0.0196 NZD. With these numbers out, it is clear margin performance continues to shape investor discussions around the business.

See our full analysis for Rakon.

Now, let’s see how these headline results compare with the wider narratives. Some perspectives might be supported, while others could be seriously challenged.

Curious how numbers become stories that shape markets? Explore Community Narratives

Earnings Swing From Loss to Profit

• Rakon moved from a net loss of 10.4 million NZD in H1 2025 to a net profit of 4.5 million NZD in the recent H1 2026 period, a swing of nearly 15 million NZD.
• What is notable is the narrative emphasizing Rakon’s hallmark as a high-quality earner. This sharp profitability turnaround supports the view that recent performance may be more than a one-off, possibly indicating the start of a more resilient trend.
  • Bulls point to the H1 2026 profit alongside the transition to positive EPS as evidence of business quality and earnings durability.
  • Bears, however, note that despite the positive earnings, the average earnings decline over the past five years (down 37.4% per year) creates tension in reading a single period’s results as a full turnaround.

Valuation Skyrockets Above Peers

• Rakon’s Price-To-Earnings Ratio stands at 129.6 times, far exceeding the peer average of 27.7 times and the global industry norm of 25 times.
• Critics highlight that this premium valuation increases expectations for Rakon’s future growth, making any slip in delivery a risk for investors.
  • The bullish outlook rests on forecasted earnings growth of 82.57% per year to justify the high price.
  • The current share price of 0.89 NZD is significantly above the DCF fair value of 0.12 NZD, showing that investors must balance enthusiasm with caution.

Revenue Growth Outpaces Local Market

• Revenue is forecast to rise by 17.7% annually, outpacing the overall New Zealand market and signaling sector-leading momentum.
• The prevailing market view presents Rakon’s positioning in telecom, space, and defense as a foundation for diversified growth.
  • Exposure to multiple high-demand industries could reduce volatility and make future revenue growth less dependent on any single market cycle.
  • High sector optimism often sustains premium valuations, but Rakon will need to deliver consistently on these growth rates to maintain investor support.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Rakon's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Despite Rakon’s recent profit swing, its extremely high valuation compared to peers makes any earnings slip especially risky for investors.

If you want to focus on value opportunities with less valuation risk, check out these 926 undervalued stocks based on cash flows to find stocks offering better fundamentals for their price.

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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