BAE Systems (BA) AI Stock Analysis

• Market Cap: $51.48B
• Dividend Yield: 1.86%
• Average Volume (3M): 4.02M
• Price to Earnings (P/E): 27.0
• Beta (1Y): 0.56
• Revenue Growth: 11.60%
• EPS Growth: 8.03%
• Country: UK
• Employees: 107,400
• Sector: Industrials
• Sector Strength: 74
• Industry: Aerospace & Defense
• EPS (TTM): 0.35
• Shares Outstanding: 3,006,451,700
• 10 Day Avg. Volume: 2,853,403
• 30 Day Avg. Volume: 4,016,176
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.25
• Enterprise Value/Revenue: 2.44
• Enterprise Value/Gross Profit: 28.59
• Enterprise Value/Ebitda: 17.03
• 1Y Price Target: $2,062.07
• Price Target Upside: 16.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 70 Outperform
• Price Target: 1,955.00p ▲(10.02% Upside)

BAE Systems' strong financial performance is the most significant factor, showcasing consistent growth and a solid market position. Technical analysis indicates mixed signals with potential short-term weakness, while valuation suggests the stock is relatively expensive. The absence of earnings call data and corporate events does not impact the overall score.

Positive Factors

Cash Flow

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

Earnings Performance

Earnings before interest and taxes (EBIT) are predicted to rise by 6%.

Sales Growth

Sales are forecasted to increase by 7% compared to the previous year.

Negative Factors

Foreign Exchange

Foreign exchange headwinds might lead to consensus cuts.

Free Cash Flow Guidance

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

Order Levels

Orders are expected to be softer, with a decrease of 11% compared to the previous year.

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 generates revenue primarily through the sale of defense and aerospace products, as well as through service contracts. Key revenue streams include contract awards from government clients for defense systems and services, sales of military vehicles and naval ships, and revenue from cybersecurity and intelligence services. The company often collaborates with governments and other defense contractors on large projects, which enhances its ability to secure substantial contracts. Additionally, long-term maintenance and support agreements for its products provide ongoing revenue, contributing to its financial stability.

BAE Systems Financial Statement Overview

Summary

BAE Systems demonstrates strong financial performance with consistent revenue and profit growth, efficient cost management, and robust cash flow generation. Despite rising leverage, the balance sheet remains solid with a strong equity base.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	26.31B	23.08B	21.26B	19.52B	19.28B
Gross Profit	17.23B	15.10B	5.91B	5.19B	5.14B
EBITDA	3.97B	3.45B	2.81B	2.91B	2.41B
Net Income	1.96B	1.86B	1.59B	1.76B	1.30B
Balance Sheet
Total Assets	38.14B	32.06B	31.46B	27.14B	27.94B
Cash, Cash Equivalents and Short-Term Investments	3.38B	4.11B	3.36B	3.11B	2.96B
Total Debt	10.15B	6.48B	6.86B	6.36B	6.68B
Total Liabilities	26.36B	21.34B	19.06B	18.66B	22.34B
Stockholders Equity	11.62B	10.56B	11.21B	7.44B	4.64B
Cash Flow
Free Cash Flow	2.76B	2.80B	2.00B	1.82B	508.00M
Operating Cash Flow	3.92B	3.76B	2.70B	2.28B	985.00M
Investing Cash Flow	-5.27B	-541.00M	-548.00M	-14.00M	-2.08B
Financing Cash Flow	695.00M	-2.19B	-2.06B	-1.99B	1.20B

BAE Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1777.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 1777 is above the 20-day moving average (MA) of 1757.33, below the 50-day MA of 1817.95, and above the 200-day MA of 1569.87, indicating a neutral trend. The MACD of -10.91 indicates Negative momentum. The RSI at 49.16 is Neutral, neither overbought nor oversold. The STOCH value of 40.97 is Neutral, 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
BA	70 Outperform	$51.48B	27.01	17.59%	1.86%	11.60%	8.03%
Sector *	64 Neutral	$10.73B	15.74	7.64%	2.01%	2.76%	-15.10%
RYCEF	―	$121.30B	16.61	3725.44%	1.50%	―	―
SRP	77 Outperform	£2.23B	46.58	5.21%	1.58%	0.84%	-62.73%
CHG	71 Outperform	£1.45B	37.50	11.62%	1.46%	8.00%	674.47%
BAB	61 Neutral	£5.36B	21.72	49.75%	0.61%	10.08%	49.21%
QQ	56 Neutral	£2.58B	17.97	-23.92%	1.85%	1.02%	-240.44%