Bae Systems (BAESY)
OTHER OTC:BAESY
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BAE Systems plc ADR
(OTC:BAESY)
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Rating:72Outperform
Price Target:
$129.00
â–²(29.10% Upside)
Action:UpgradedDate:02/20/26
The score is driven primarily by solid underlying financial performance and a strong technical uptrend, reinforced by a constructive earnings-call outlook supported by record backlog and guidance for continued growth. The main constraints are valuation (high P/E) and some financial quality concerns around rising debt and cash-flow/margin variability.
Positive Factors
Record backlog
A record GBP 84bn backlog (≈3x sales) and ~GBP 260bn pipeline provide durable multi-year revenue visibility tied to long-term government procurement. This structural backlog underpins steady production, high contract renewal probability and predictable forward revenue for 2–6+ months horizon.
Negative Factors
Rising total debt
Material increase in total debt into 2024–25 reduces headroom for cyclical stress and limits optionality versus prior years. Higher absolute leverage can constrain capital allocation during downturns and raises sensitivity to interest costs and covenant constraints despite acceptable debt/equity metrics for the sector.
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Positive Factors
Negative Factors
Record backlog
A record GBP 84bn backlog (≈3x sales) and ~GBP 260bn pipeline provide durable multi-year revenue visibility tied to long-term government procurement. This structural backlog underpins steady production, high contract renewal probability and predictable forward revenue for 2–6+ months horizon.
Read all positive factors
BAE Systems plc ADR (BAESY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$89.88B
Dividend Yield1.89%
Average Volume (3M)38.47K
Price to Earnings (P/E)25.5
Beta (1Y)0.57
Revenue Growth14.68%
EPS Growth10.99%
CountryUS
Employees107,400
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)2.17
Shares Outstanding751,387,100
10 Day Avg. Volume92,054
30 Day Avg. Volume38,469
Financial Highlights & Ratios
PEG Ratio5.45
Price to Book (P/B)4.38
Price to Sales (P/S)1.86
P/FCF Ratio22.15
Enterprise Value/Market Cap0.82
Enterprise Value/Revenue2.61
Enterprise Value/Gross Profit29.58
Enterprise Value/Ebitda19.56
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)4.5
Revenue Forecast (FY)$44.35B
BAE Systems plc ADR Business Overview & Revenue Model
Company Description
BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Cyber & Intelligence, Platforms & Services (US), Air, and Maritime. The Electronic Systems segment offer...
How the Company Makes Money
BAE Systems generates revenue primarily through the sale of defense and security products and services to government and commercial customers. The company operates through several key segments, including Electronic Systems, Platforms & Services, a...
BAE Systems plc ADR Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call presented a strong operational and financial performance in 2025: record sales, double-digit EBIT growth, robust order intake (GBP 37bn) and an all-time backlog (GBP 84bn), supported by heavy investment in R&D and capacity and a strengthened balance sheet. Key growth engines (P&S, Air, ES and MBDA) demonstrated notable momentum and management provided constructive guidance for 2026 (sales +7% to +9%; EBIT +9% to +11%). Principal risks highlighted were cash-flow timing volatility driven by customer advances, higher expected tax rates, and lower early-stage maritime margins. On balance the positives—in particular high-quality backlog, margin expansion, strong free cash conversion in 2025 and continued strategic investment—outweigh the operational and timing headwinds.Positive Updates
Record Group Sales and Organic Growth
Group sales reached GBP 30.7 billion in 2025, up 10% year-on-year (organic growth ~9%), marking a record year of revenue for the company.
Negative Updates
Cash Flow Variability Related to Customer Advances
Operating cash flow was materially H2-weighted; the company cited a reduction in net advanced inflows in P&S and Air versus 2024 which pressured operating cash flow. Management excludes material advance receipts from guidance due to unpredictability; 2026 free cash guidance (>GBP 1.3 billion) is materially below 2025 actual free cash flow of GBP 2.2 billion and assumes an ~GBP 600 million unwind of advances in 2026.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Group Sales and Organic Growth
Group sales reached GBP 30.7 billion in 2025, up 10% year-on-year (organic growth ~9%), marking a record year of revenue for the company.
Read all positive updates
Company Guidance
Guidance for 2026 signals continued strong growth and cash generation: group sales are guided to rise 7–9% (air and Platforms & Services 9–11%; Electronic Systems 6–8%; maritime and cyber mid‑single digits), underlying EBIT/profitability is expected to grow 9–11% (driving EPS growth of 9–11%), and free cash flow is expected to exceed GBP 1.3 billion (guidance excludes material advance receipts and assumes an approximate GBP 600 million unwind of advances in 2026); the company also set a 3‑year (2026–28) cash target to exceed GBP 6 billion (vs. GBP 7.3 billion delivered in 2023–25). These targets sit on a record backlog of GBP 84 billion (~3x annual sales) and a broader incumbents/pipeline of ~GBP 260 billion (~9x sales), with FY25 metrics including GBP 30.7 billion sales, GBP 37 billion orders (book‑to‑bill 1.2), GBP 3.3 billion EBIT (10.8% margin, +20bps), GBP 2.2 billion free cash flow, CapEx close to GBP 1 billion (averaging ~GBP 1 billion p.a., >GBP 4 billion since 2020), record self‑funded R&D (up ~70% since 2020), FY25 shareholder returns of GBP 1.5 billion and a 10% dividend increase, net debt down 22% to GBP 3.8 billion (net debt/EBITDA 0.9x ex‑leases) and a Moody’s upgrade to A3.BAE Systems plc ADR Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
66
Positive
Cash Flow
61
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 27.72B | 26.31B | 23.08B | 21.26B | 19.52B |
| Gross Profit | 2.44B | 17.23B | 15.10B | 2.77B | 2.50B |
| EBITDA | 3.59B | 3.97B | 3.45B | 3.06B | 3.13B |
| Net Income | 2.02B | 1.96B | 1.86B | 1.59B | 1.76B |
Balance Sheet | |||||
| Total Assets | 37.61B | 38.14B | 32.06B | 31.46B | 27.14B |
| Cash, Cash Equivalents and Short-Term Investments | 3.61B | 3.38B | 4.11B | 3.36B | 3.11B |
| Total Debt | 10.55B | 10.15B | 6.48B | 6.97B | 6.36B |
| Total Liabilities | 25.70B | 26.36B | 21.34B | 20.06B | 19.47B |
| Stockholders Equity | 11.76B | 11.62B | 10.56B | 11.21B | 7.44B |
Cash Flow | |||||
| Free Cash Flow | 2.33B | 2.76B | 2.80B | 2.15B | 1.99B |
| Operating Cash Flow | 3.23B | 3.92B | 3.76B | 2.84B | 2.45B |
| Investing Cash Flow | -898.86M | -5.27B | -541.00M | -422.00M | 66.00M |
| Financing Cash Flow | -2.21B | 695.00M | -2.19B | -2.33B | -2.26B |
BAE Systems plc ADR Technical Analysis
Positive
99.92
Price Trends
114.58
Positive
105.36
Positive
102.58
Positive
Market Momentum
1.38
Negative
59.45
Neutral
91.30
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BAESY, the sentiment is Positive. The current price of 99.92 is below the 20-day moving average (MA) of 119.09, below the 50-day MA of 114.58, and below the 200-day MA of 102.58, indicating a bullish trend. The MACD of 1.38 indicates Negative momentum. The RSI at 59.45 is Neutral, neither overbought nor oversold. The STOCH value of 91.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BAESY.
BAE Systems plc ADR Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $97.57B | 19.57 | 26.50% | 1.55% | -0.14% | 72.35% | |
75 Outperform | $67.61B | 35.53 | 8.28% | 1.61% | 2.83% | 47.00% | |
74 Outperform | $94.64B | 21.58 | 17.57% | 1.73% | 11.86% | 17.39% | |
74 Outperform | $144.61B | 22.26 | 80.53% | 2.77% | 2.88% | -35.15% | |
72 Outperform | $89.88B | 25.55 | 18.23% | 1.89% | 14.68% | 10.99% | |
67 Neutral | $16.20B | 22.09 | 12.28% | 1.53% | 2.60% | -18.22% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
BAESY
BAE Systems plc ADR
123.11
40.58
49.18%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.