BAE Systems (BA) AI Stock Analysis

• Market Cap: $46.31B
• Dividend Yield: 1.92%
• Average Volume (3M): 13.00M
• Price to Earnings (P/E): 24.3
• Beta (1Y): 0.69
• Revenue Growth: 14.01%
• EPS Growth: 6.03%
• Country: UK
• Employees: 107,400
• Sector: Industrials
• Sector Strength: 67
• Industry: Aerospace & Defense
• EPS (TTM): 0.65
• Shares Outstanding: 3,005,276,400
• 10 Day Avg. Volume: 8,488,832
• 30 Day Avg. Volume: 13,001,354
• PEG Ratio: 4.03
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.96
• Price to Cash Flow (P/CF): 31.70
• P/FCF Ratio: 52.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 1,663.55p
• Price Target Upside: 4.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

BAE Systems benefits from strong financial performance with consistent growth and solid cash flow. The technical indicators reflect positive momentum, but caution is advised due to potential overbought conditions. The valuation is less attractive due to a high P/E ratio. Overall, the company is well-positioned in its industry, but current valuation and technical signals suggest a cautious approach.

Positive Factors

Contracts and Orders

BAE highlights a number of orders recorded in H2 so far, including €2.5bn from BAE's share in MBDA's order intake and $1.1bn in vehicle contracts with the US Army.

Earnings

The FY results show a strong beat on free cash flow at £2.51bn compared to consensus.

Order Book

BAE's trading update points to £25bn of orders booked to date, putting the group on track for b-t-b above 1x.

Negative Factors

Defense Program Concerns

Concerns include the crash overnight of an F-35 in Alaska and overall concerns on this program.

Free Cash Flow Guidance

The FY25 guide for more than £1.1bn in free cash flow is softer than the consensus at £1.92bn.

US Defense Spending

There are concerns on US spending and weak US peers reporting.

BAE Systems 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 offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance and seeker solutions, military communication systems and data links, persistent surveillance systems, space electronics, and electric drive propulsion systems. The Cyber & Intelligence segment provides solutions to modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security; systems engineering, integration, and sustainment services for critical weapons systems, C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies. It also offers data intelligence solutions to defend against national-scale threats, protect their networks, and data against attacks; security and intelligence solutions to the United Kingdom government and allied international governments; anti-fraud and regulatory compliance solutions; and enterprise-level data and digital services. The Platforms & Services (US) segment manufactures combat vehicles, weapons, and munitions, as well as provides ship repair services and the management of government-owned munitions facilities. The Air segment develops, manufactures, upgrades, and supports combat and jet trainer aircraft. The Maritime segment designs, manufactures, and supports surface ships, submarines, torpedoes, radars, and command and combat systems; and supplies naval gun systems. It also supplies naval weapon systems, missile launchers, and precision munitions. The company was founded in 1970 and is based in Farnborough, the United Kingdom.

How the Company Makes Money

BAE Systems makes money through a diversified revenue model centered around its defense and aerospace operations. The company's key revenue streams include the sale of military aircraft, naval vessels, and combat vehicles to governments and defense organizations worldwide. Additionally, BAE Systems provides ongoing maintenance, repair, and upgrade services for its products, ensuring long-term contracts and recurring revenue. The company also generates income from its cyber security and intelligence services, catering to both defense and commercial sectors. Significant partnerships with governments, particularly in the United States, United Kingdom, and Saudi Arabia, as well as collaborations with other defense contractors, play a crucial role in BAE Systems' earnings.

BAE Systems Financial Statement Overview

Summary

BAE Systems exhibits strong financial performance with consistent revenue and profit growth, solid balance sheet with increasing equity, and robust cash flow generation. The rising leverage is a point to monitor, but overall financial health is solid.

Income Statement

BAE Systems shows a strong upward trajectory with consistent revenue growth from $18.3 billion in 2019 to $26.3 billion in 2024, indicating a robust market position. The gross profit margin improved significantly, reaching approximately 65.5% in 2024, demonstrating efficient cost management. Net profit margin has remained stable at around 7.4%, reflecting steady profitability. EBIT and EBITDA margins have also shown positive trends, highlighting operational efficiency. This consistent performance indicates strong industry positioning and effective management.

Balance Sheet

The balance sheet showcases a stable financial position with stockholders' equity growing from $5.4 billion in 2019 to $11.6 billion in 2024. The debt-to-equity ratio has increased, reflecting higher leverage, but remains manageable. The equity ratio improved over the years, indicating a solid capital structure. While the return on equity has been strong, it slightly dipped in 2024 due to elevated equity levels. Overall, the financial health is solid, though the rising debt levels should be monitored.

Cash Flow

BAE Systems displays strong cash flow generation with a growing operating cash flow, reaching $3.925 billion in 2024. Free cash flow has also shown growth, indicating effective capital expenditure management. The operating cash flow to net income ratio is robust, underscoring the company's ability to convert profits into cash. Although free cash flow slightly decreased in 2024 compared to 2023, the overall cash flow position is healthy, supporting further growth and investment.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
24.56B	26.31B	23.08B	21.26B	19.52B	19.28B
	Gross Profit
2.19B	17.23B	15.10B	5.91B	5.19B	5.14B
	EBIT
2.36B	2.69B	2.57B	2.05B	1.87B	1.70B
	EBITDA
3.35B	3.97B	3.45B	2.81B	2.91B	2.41B
	Net Income Common Stockholders
1.84B	1.96B	1.86B	1.59B	1.76B	1.30B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.32B	3.38B	4.11B	3.36B	3.11B	2.96B
	Total Assets
24.75B	38.14B	32.06B	31.46B	27.14B	27.94B
	Total Debt
4.30B	10.15B	6.48B	6.86B	6.36B	6.68B
	Net Debt
1.07B	6.78B	2.47B	3.75B	3.44B	3.91B
	Total Liabilities
19.13B	26.36B	21.34B	19.06B	18.66B	22.34B
	Stockholders Equity
5.55B	11.62B	10.56B	11.21B	7.44B	4.64B
Cash Flow		Free Cash Flow
1.96B	2.76B	2.80B	2.00B	1.82B	508.00M
	Operating Cash Flow
2.92B	3.92B	3.76B	2.70B	2.28B	985.00M
	Investing Cash Flow
-5.07B	-5.27B	-541.00M	-548.00M	-14.00M	-2.08B
	Financing Cash Flow
1.79B	695.00M	-2.19B	-2.06B	-1.99B	1.20B

BAE Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1584.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:BA, the sentiment is Positive. The current price of 1584.5 is below the 20-day moving average (MA) of 1595.13, above the 50-day MA of 1390.62, and above the 200-day MA of 1300.17, indicating a neutral trend. The MACD of 59.41 indicates Positive momentum. The RSI at 58.53 is Neutral, neither overbought nor oversold. The STOCH value of 12.66 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:BA.

BAE Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SMIN	79 Outperform	£6.62B	22.18	13.99%	2.22%	6.10%	33.05%
ULVR	78 Outperform	£113.27B	23.02	30.27%	3.30%	-0.76%	-12.83%
BA	74 Outperform	$46.31B	24.27	17.85%	1.92%	14.01%	6.03%
BAB	74 Outperform	£3.75B	19.49	44.03%	0.71%	3.34%	481.76%
Sector *	62 Neutral	$8.27B	14.02	2.58%	3.08%	3.83%	-15.91%