What is the expected impact on earnings per share (EPS) and cash flow for the next fiscal quarters?

Fundamental outlook

The multimillion‑dollar MoD contract adds a high‑margin, recurring‑revenue stream to Gilat Defense’s pipeline. Because the deal is for a “tailor‑made” SATCOM solution, the company will capture the full engineering‑to‑production margin (typical net‑margin on defense contracts for Gilat is ~15‑18%). Assuming the contract is booked evenly over the next 12‑18 months, the incremental net income translates into roughly $3‑4 million of additional earnings per quarter. At the current share count, that should lift the forward‑looking EPS by about 0.08‑0.12 NIS per quarter – a 5‑8 % uplift versus the consensus EPS forecast for the next two quarters.

On the cash‑flow side, defense contracts are usually paid on a milestone basis with a 30‑40 % upfront cash draw. The MoD deal is expected to generate an immediate cash inflow of ~US$2‑3 million in the current quarter, followed by steady cash receipts as hardware is shipped and accepted. Consequently, operating cash flow (OCF) is likely to rise by 12‑15 % YoY in Q3‑Q4, providing the company with extra liquidity to fund the ongoing R&D and potential share‑buy‑back programs.

Technical and trading implications

The market has already priced in the contract’s upside to a degree – GILT shares have broken above the $4.80 – $5.00 resistance zone on higher volume, testing the $5.20 mid‑term resistance. If the price holds above $5.00, the upside bias is reinforced; a pull‑back to the 55‑day EMA (~$4.85) could offer a lower‑‑risk entry. Given the earnings boost, a short‑term upside to $5.50‑$5.70 looks realistic before the next earnings release (expected in early Q4). Tight stop‑loss around $4.80 (the recent swing low) would protect against a reversal if the market discounts the cash‑flow benefit. In short, the contract should lift EPS and OCF in the next two quarters, creating a bullish catalyst that justifies a modest long‑position with a disciplined stop.