BAE Systems (BA) AI Stock Analysis

• Market Cap: £55.08B
• Dividend Yield: 1.62%
• Average Volume (3M): 7.77M
• Price to Earnings (P/E): 29.0
• Beta (1Y): 0.63
• Revenue Growth: 14.01%
• EPS Growth: 6.03%
• Country: UK
• Employees: 107,400
• Sector: Industrials
• Sector Strength: 86
• Industry: Aerospace & Defense
• EPS (TTM): 0.35
• Shares Outstanding: 3,013,229,000
• 10 Day Avg. Volume: 8,840,565
• 30 Day Avg. Volume: 7,765,746
• PEG Ratio: -2.30
• Price to Book (P/B): 2.38
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 13.30
• 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: £2,050.46
• Price Target Upside: 9.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 66 Neutral
• Price Target: 2,115.00p ▲(12.53%Upside)

BAE Systems demonstrates strong financial performance, highlighted by consistent revenue growth and robust cash flow generation. However, technical indicators suggest overbought conditions, and the valuation appears high relative to peers, which may limit upside potential in the near term.

Positive Factors

Earnings Performance

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

Financial Results

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

Negative Factors

Defense Sector Concerns

Concerns on F-35, overall US defense uncertainty and the UK's strategic defence review create a negative backdrop for sentiment.

Foreign Exchange Impact

Foreign exchange headwinds might lead to consensus cuts.

Order Performance

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 is a British multinational defense, security, and aerospace company headquartered in London, United Kingdom. It operates in various sectors including air, maritime, land, and cyber defense. The company provides advanced technology-led defense, aerospace, and security solutions that deliver a competitive edge to its clients. Its core products include military aircraft, naval ships, combat vehicles, electronic systems, and cybersecurity solutions.

How the Company Makes Money

BAE Systems makes money primarily through contracts with governments and large corporations, delivering a range of military and security products and services. The company's key revenue streams include the sale and support of defense equipment such as fighter jets, warships, and armored vehicles, as well as providing cyber and intelligence services. It has significant partnerships with government entities, notably the United States Department of Defense and the UK Ministry of Defence, which are major contributors to its earnings. Additionally, BAE Systems engages in long-term contracts that ensure steady revenue flow from maintenance, upgrades, and support services for its products.

BAE Systems Financial Statement Overview

Summary

BAE Systems' financial performance is strong, with consistent revenue growth and improved profit margins. The balance sheet shows a solid capital structure despite rising leverage, and cash flow generation is robust, supporting growth initiatives.

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: 1879.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 1879.5 is below the 20-day moving average (MA) of 1884.92, above the 50-day MA of 1832.80, and above the 200-day MA of 1452.32, indicating a neutral trend. The MACD of 6.08 indicates Positive momentum. The RSI at 52.05 is Neutral, neither overbought nor oversold. The STOCH value of 63.34 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
QQ	78 Outperform	£2.71B	17.97	-23.92%	1.11%	10.36%	32.77%
SRP	75 Outperform	£2.09B	49.45	4.71%	2.01%	-0.68%	-78.93%
CHG	75 Outperform	£1.51B	38.67	11.62%	1.86%	8.00%	674.47%
BAB	74 Outperform	£5.47B	22.13	49.75%	0.74%	3.34%	481.76%
RR	73 Outperform	$80.68B	31.75		0.46%	14.70%	3.76%
BA	66 Neutral	£55.08B	28.95	17.85%	1.62%	14.01%	6.03%
Sector *	58 Neutral	$1.34B	4.24	-2.93%	7.38%	3.67%	-51.13%