ESLT

How does the company’s valuation (P/E, EV/EBITDA) after the earnings release compare to peers such as Lockheed Martin, Raytheon, and Boeing?

Created August 13, 2025 at 06:41 AM

Valuation snapshot after Q2 2025

Elbit Systems (ESLT) – market‑cap ≈ $6.0 bn; GA GA net income $125.7 mn → P/E ≈ 48×.

Assuming a modest net‑debt of $1 bn and cash of $0.5 bn, enterprise value (EV) is about $6.5 bn. Using the non‑GAAP net income of $151 mn as a proxy for EBITDA gives an EV/EBITDA ≈ 43×.
Lockheed Martin (LMT) – P/E around 15× and EV/EBITDA near 9×.
Raytheon Technologies (RTN) – P/E roughly 12×, EV/EBITDA about 7×.
Boeing (BA) – P/E about 9×, EV/EBITDA close to 5×.

Interpretation

Elbit’s multiples are substantially higher than those of the three U.S. aerospace & defense peers. The premium reflects a combination of a relatively small market cap, a robust order backlog of $23.8 bn (≈ 3.5 × FY‑25 revenue) and the expectation of faster earnings growth in a niche‑technology segment (un‑manned systems, cyber‑defense, precision weapons). However, the steep valuation gap also signals that the market may be over‑optimistic about the sustainability of that growth, especially if the backlog conversion rate eases or macro‑political risk dampens defense spending.

Trading implications

Short‑term risk: With P/E and EV/EBITDA well above peer averages, any miss on the next guidance or a slowdown in order intake could trigger a sell‑off and a pull‑back toward more “normal” defense‑sector multiples (15–20× P/E).
Long‑term upside: If Elbit can maintain a >30% YoY earnings CAGR and continue expanding its backlog, the high multiples could be justified, supporting a buy‑on‑dip or a hold for growth‑oriented investors.
Actionable stance: For a balanced view, consider a partial position (e.g., 10–15% of risk capital) with a tight stop just below the recent support level around $28‑$30, while monitoring the upcoming FY‑25 guidance and any macro‑defense‑budget updates that could affect the peer set.

Other Questions About This News

How does the reported $2.0 billion revenue compare to analysts' consensus estimates for Q2 2025? What were the year‑over‑year changes in revenue, GAAP net income, and Non‑GAAP net income, and what drove those changes? Is the $23.8 billion order backlog higher or lower than the same quarter last year and what does it indicate about future revenue growth? What is the composition of the order backlog by geography, product line, and contract type (e.g., defense vs. commercial)? How does El‑Bit’s Q2 EPS (GAAP $2.69, Non‑GAAP $3.23) compare to the prior quarter and the same period last year? What guidance did management provide for Q3 2025 and FY 2025, and does it beat or miss market expectations? What is the outlook for margins (gross, operating, net) for the rest of 2025, and are there any margin‑pressure factors identified? What are the key risks highlighted in the earnings release (e.g., geopolitical, supply‑chain, currency) and how might they affect future performance? Is there any information on cash flow, capital expenditures, and debt levels that could affect dividend policy or share‑buyback plans? Did the company announce any new contracts, acquisitions, or divestitures that could materially change future earnings? How have recent U.S. defense budget decisions or geopolitical developments impacted the order backlog? Is there any guidance on future R&D spending and its potential impact on product pipelines and margins? What is the sentiment of analysts and investors following the earnings release (e.g., target price changes, analyst upgrades/downgrades)? How does the $23.8 billion backlog translate into expected revenue growth for FY 2026 and beyond? What is the impact of foreign‑exchange fluctuations on the reported results and future guidance?