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Thales SA Unsponsored ADR (THLLY)
OTHER OTC:THLLY
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Thales SA Unsponsored ADR
(OTC:THLLY)
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Rating:66Neutral
Price Target:
$60.00
▲(14.74% Upside)
Action:ReiteratedDate:03/08/26
The score is supported by solid underlying financial performance (improving margins and strong cash generation) and a positive earnings call with upbeat 2026 guidance and strong order/backlog visibility. These are tempered by weak technical momentum (below key moving averages with negative MACD) and some fundamental uncertainty from the sharp latest-period revenue decline and ongoing execution/headwind risks in Cyber & Digital.
Positive Factors
Cash generation
Consistently strong free cash flow and high cash‑conversion in 2024–2025 provide durable internal funding for R&D, CapEx, dividends and debt reduction. This strengthens financial resilience across defense and aerospace cycles, enabling reinvestment without relying on external financing despite working‑capital swings.
Defence backlog & order visibility
A €42bn defence backlog and record orders deliver multi‑year contracted revenue visibility and predictable cashflows. This insulates the business from short-term demand swings, supports capacity planning, and underpins sustained margins by locking in long‑term programs and repeatable delivery pipelines.
Margin improvement & guidance
Material margin uplift and explicit guidance toward 12.6–12.8% (and ~13–14% medium‑term ambition) indicate lasting operational improvements and disciplined portfolio management. Clear targets and demonstrated execution suggest sustainable profitability gains rather than transitory cost cuts, supporting long‑term cash generation.
Negative Factors
Cyber & Digital execution risk
Underperformance in Cyber & Digital, including double‑digit service declines and Imperva integration‑driven salesforce turnover, is a structural concern in a strategic, higher‑margin area. Persistent weakness or integration friction could cap overall growth, reduce margin expansion potential, and weaken the group's exposure to fast‑growing cyber markets.
Meaningful leverage
Despite recent deleveraging, a relatively high and historically volatile debt load limits financial flexibility. Elevated leverage increases interest and refinancing risk, constrains capital allocation for M&A or accelerated R&D, and exposes the company during cyclical downturns or when program cash flows delay.
Recurring tax & rising CapEx
A recurring French tax surcharge combined with materially higher CapEx guidance creates structural incremental cash outflows. These predictable drains reduce free cash available for deleveraging, dividends or strategic M&A, raising pressure on cash conversion targets and on executing margin improvements to offset higher recurring costs.
Thales SA Unsponsored ADR (THLLY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$57.72B
Dividend Yield1.4%
Average Volume (3M)11.73K
Price to Earnings (P/E)29.4
Beta (1Y)0.28
Revenue Growth11.77%
EPS Growth-50.07%
CountryUS
Employees78,189
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)1.15
Shares Outstanding1,029,709,600
10 Day Avg. Volume0
30 Day Avg. Volume11,729
Financial Highlights & Ratios
PEG Ratio2.21
Price to Book (P/B)5.93
Price to Sales (P/S)2.22
P/FCF Ratio18.67
Enterprise Value/Market Cap0.90
Enterprise Value/Revenue2.36
Enterprise Value/Gross Profit8.91
Enterprise Value/Ebitda16.49
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Thales SA Unsponsored ADR Business Overview & Revenue Model
Company DescriptionThales S.A. provides various solutions for civilian and military customers in the aeronautics, space, defense, security, ground transportation, and digital security markets worldwide. It operates through Aerospace, Transport, Defence & Security, and Digital Identity & Security segments. The company offers communications, command, and control systems; mission services and support; protection and mission/combat systems; surveillance, detection, and intelligence systems; training and simulation solutions for air, land, naval, and joint forces; and digital identity and security solutions. It also provides air traffic management solutions; flight decks and avionics equipment and functions; in-flight entertainment and connectivity systems and services; electrical systems; aerospace training solutions; navigation solutions; support and services for avionics equipment; and vision systems. In addition, the company designs, operates, and delivers satellite-based systems for telecommunications, navigation, earth observation, environmental management, exploration, and science and orbital infrastructures; signaling, communications and supervision, and fare collection management systems and related services; cybersecurity and railway digitalization systems; and main line rail, and urban and intermodal mobility solutions. Further, it provides solutions for various markets and applications, including radiology, radio frequency, microwave sources, training and simulation solutions, lasers, and microelectronics solutions for science, industry, space, defense, automotive, railways, and energy conversion platforms. Thales S.A. has a strategic agreement with Google LLC. The company was formerly known as Thomson-CSF and changed its name to Thales S.A. in 2000. Thales S.A. was founded in 1893 and is headquartered in Courbevoie, France.
How the Company Makes MoneyThales SA generates revenue through multiple key streams, primarily by providing high-tech systems and services to both governmental and commercial clients. The company's revenue model is largely driven by long-term contracts and partnerships in sectors such as defense and aerospace, where it supplies equipment and services for military and civilian aircraft, satellite systems, and ground transportation infrastructure. Additionally, Thales earns revenue from cybersecurity solutions that cater to both private enterprises and public institutions, focusing on securing sensitive data and critical systems. Strategic alliances with other technology firms and defense contractors enhance its market reach, while ongoing investments in research and development help to maintain a competitive edge and drive future growth.
Thales SA Unsponsored ADR Earnings Call Summary
Earnings Call Date:Mar 03, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Positive
The call presented a strongly positive financial and commercial performance for 2025: record-level order intake, accelerating organic sales growth (+8.8%), improved profitability (adjusted EBIT +>13%, margin 12.4%), exceptional free operating cash flow (EUR 2.6bn, +27%) and meaningful deleveraging (net debt EUR 1.6bn). Strategic highlights include Defence momentum (EUR 15.1bn orders, EUR 42bn backlog), Avionics/Space recovery, AI and R&D leadership, and progress on a proposed European space JV. Key challenges center on Cyber & Digital underperformance (Cyber Products -3.8% organic; Cyber Services down double-digit) linked to integration friction, FX headwinds (~-1.5pp on sales), a recurring French tax surcharge (EUR 75m in 2025; ~EUR 90m expected in 2026), and higher near-term CapEx. On balance, the positive commercial, profitability and cash-generation results and strong defence/aerospace momentum outweigh the cyber and near-term cost/FX headwinds, and management provided clear plans and guidance to address weaknesses.Q4-2025 Updates
Positive Updates
Record Order Intake Maintained
Order intake of EUR 25.3 billion in 2025, matching the record level from 2024; group book-to-bill ratio at 1.14 and 1.24 for Defence, indicating strong commercial momentum and healthy future revenue visibility.
Sales Growth Above Guidance
Group sales reached EUR 22.1 billion with organic growth of 8.8% (reported growth 7.6% after a c.1.5 percentage point FX headwind), driven notably by Defence and Aerospace contributions and balanced growth across emerging and mature markets.
Improved Profitability
Adjusted EBIT rose to EUR 2.7 billion (reported increase >13%), with an EBIT margin of 12.4%. Adjusted net income, group share, grew by 5.5% and crossed the EUR 2 billion mark; adjusted EPS was EUR 9.76.
Strong Free Operating Cash Flow and Deleveraging
Free operating cash flow increased 27% to EUR 2.6 billion in 2025, with an exceptional conversion ratio of 128% from adjusted net income. Net debt reduced to EUR 1.6 billion and the Board proposed a dividend up 5.5% to EUR 3.90 (payout ratio ~40%).
Defence Segment Outperformance and Backlog Strength
Defence order intake reached EUR 15.1 billion (record), book-to-bill >1.2 for the seventh consecutive year, and backlog stood at EUR 42 billion (c.3.4 years of sales). Multiple large orders (20 >EUR100m) including air defence wins (SAMP/T NG) bolster long-term visibility.
Aerospace & Space Recovery and Profitability Gains
Aerospace orders EUR 6.1 billion; sales EUR 5.9 billion with organic +8.7%. Avionics delivered double-digit growth in 2025 and adjusted EBIT for Aerospace increased ~39% organically to EUR 560 million (margin 9.5%). Space returned to positive adjusted EBIT in 2025 and benefitted from several large contracts including IRIS2 initial phase.
Innovation & AI Leadership
Significant AI investment and deployment: ~800 AI experts, ~100 PhD students, 5 country hubs for cortAIx, ~200 patents, cortAIx embedded across 100+ products and 250+ use cases. Concrete AI-enabled product wins include TALIOS (AI-assisted targeting) and AI-augmented autonomous mine countermeasures delivered to the French Navy.
Sustainability & Diversity Progress
ESG advances: Climate Passport completion by 94.6% of managers (vs 85% target); Scope 1 & 2 CO2 emissions reduced by 75.2% (2024) and Scope 3 down 15.4% vs 2018; women in senior management at 21.8% and 69.2% of management committees have at least four women (up from 64.1%).
Negative Updates
Cyber & Digital Underperformance
Cyber & Digital sales were broadly flat organically in 2025. Cyber Products declined 3.8% organically and Cyber Services were down double-digit (notably soft in Australia). Integration of Imperva caused elevated sales-force turnover and weighed on performance; Digital Identity only up ~1% organically. CDI adjusted EBIT margin was 13.7% but management indicates recurring margin closer to ~13% for 2025.
Currency Headwinds
Stronger euro against major currencies created a material FX headwind: approximately -1.5 percentage points on reported sales growth in 2025 and a negative currency effect of about EUR 37 million on adjusted EBIT; Cyber & Digital faced a -3.4 point FX impact on sales.
French Tax Surcharge Impact
Income tax in 2025 included a EUR 75 million French tax surcharge contributing to an effective tax rate of 24.1%. Management expects the surcharge to recur in 2026 with an estimated incremental P&L impact for Thales around EUR 90 million (c. EUR 50m increase vs 2025) and ~EUR 8 million impact on Naval Group share.
Rising CapEx and Investment Requirements
Net operating investments were significantly up in 2025 (net operating investments ~-EUR 746 million) as the group invested to expand capacity. 2025 CapEx approx. EUR 750m; 2026 CapEx guidance raised to ~EUR 820–850m (around 3.5% of sales), increasing near-term cash deployment despite strong FCF generation.
Market & Regional Weaknesses in Specific Businesses
Certain end markets underperformed: Cyber Services suffered from a soft Australian market; payment card volumes remained low, limiting payment services growth; these pockets of weakness constrained overall Digital Solutions performance.
Execution & Integration Risks Remain
Imperva sales-force merger initially led to higher staff turnover and temporary sales disruption. The proposed BROMO space JV remains subject to social and antitrust authorizations (workstreams progressing constructively but not guaranteed), introducing execution and regulatory risk to the planned consolidation of European space assets.
Company Guidance
Thales guided for 2026 to a book‑to‑bill above 1 with dynamic organic sales growth of 6–7% (sales €23.3–23.6bn including FX), an adjusted EBIT margin of 12.6–12.8%, and a free operating cash‑flow conversion ratio of 95–100%; CapEx is expected around €820–850m (~3.5% of sales) and the company plans to recruit >9,000 employees. By division, Defence is expected to grow high single‑digit (backlog €42bn, ~3.4 years of sales), Aerospace mid‑single‑digit (avionics mid‑single‑digit), and Cyber & Digital mid‑single‑digit overall (cyber above, digital lower). The 2026 P&L will absorb a French tax surcharge (~€90m, ~€50m higher than 2025), the Board will propose a €3.90 dividend (+5.5%), and Thales reaffirmed medium‑term targets: 2024–28 average cash conversion 95–105% and an ambition to reach ~13–14% adjusted EBIT margin by 2028.Thales SA Unsponsored ADR Financial Statement Overview
Summary
Profitability improved over 2020–2024 (net margin ~3.1% to ~6.9%) and cash generation is strong (FCF ~2.0B in 2024 rising to ~2.53B in 2025). Offsetting this, the latest annual period shows a sharp revenue decline (~-40% growth rate) and the balance sheet still carries meaningful leverage despite improvement (debt down to ~6.1B in 2025).Income Statement
Annual results show a generally improving profitability trend from 2020–2024, with revenue rising from ~15.4B (2020) to ~20.6B (2024) and net margin improving from ~3.1% (2020) to ~6.9% (2024). Gross margin has also gradually strengthened (~23.3% to ~26.1%), indicating better underlying economics. However, the latest annual period (2025) shows a sharp revenue decline (about -40% growth rate) despite higher net income vs. 2024, which creates uncertainty around the sustainability and quality of growth.72
Positive
Balance Sheet
Leverage remains meaningful, though improving recently: total debt fell from ~7.8B (2024) to ~6.1B (2025) while equity increased to ~8.0B (2025). Historical leverage has been volatile (debt-to-equity moved from ~1.48 in 2020 down to ~0.76 in 2022, back above 1.0 in 2023–2024). Return on equity has been solid in 2023–2024 (~15%–19%), supporting the balance sheet, but the company still carries a relatively high debt load for a cyclical/contract-driven industry, which can pressure flexibility if operating conditions weaken.64
Positive
Cash Flow
Cash generation is a clear strength: free cash flow was strong in 2024 (~2.0B) and expanded further in 2025 (~2.53B), with operating cash flow also rising (~2.64B in 2024 to ~3.19B in 2025). Cash conversion versus earnings was reasonable in 2023–2024 (free cash flow running at ~61%–76% of net income), suggesting reported profits are translating into cash. The main watch-out is volatility in free cash flow growth (sharp decline in 2023, strong rebound in 2024, then down again in 2025), which may reflect working-capital swings typical in large defense/aerospace programs.78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 21.26B | 20.58B | 18.43B | 17.57B | 16.19B |
| Gross Profit | 5.62B | 5.37B | 4.77B | 4.46B | 4.03B |
| EBITDA | 3.18B | 2.67B | 2.46B | 2.27B | 2.05B |
| Net Income | 1.61B | 1.42B | 1.02B | 1.12B | 1.09B |
Balance Sheet | |||||
| Total Assets | 39.14B | 39.99B | 38.79B | 34.42B | 32.84B |
| Cash, Cash Equivalents and Short-Term Investments | 4.49B | 4.77B | 4.08B | 5.30B | 5.05B |
| Total Debt | 6.13B | 7.82B | 8.43B | 5.47B | 6.13B |
| Total Liabilities | 31.15B | 32.43B | 31.82B | 27.04B | 26.12B |
| Stockholders Equity | 7.97B | 7.52B | 6.83B | 7.17B | 6.48B |
Cash Flow | |||||
| Free Cash Flow | 2.53B | 2.01B | 970.80M | 2.56B | 2.26B |
| Operating Cash Flow | 3.19B | 2.64B | 1.60B | 3.06B | 2.71B |
| Investing Cash Flow | -873.89M | -62.80M | -4.23B | -1.17B | -493.40M |
| Financing Cash Flow | -2.55B | -2.00B | 1.59B | -1.75B | -2.17B |
Thales SA Unsponsored ADR Technical Analysis
Negative
52.29
Price Trends
59.77
Negative
57.19
Positive
57.15
Positive
Market Momentum
-0.50
Positive
46.03
Neutral
52.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For THLLY, the sentiment is Negative. The current price of 52.29 is below the 20-day moving average (MA) of 58.40, below the 50-day MA of 59.77, and below the 200-day MA of 57.15, indicating a neutral trend. The MACD of -0.50 indicates Positive momentum. The RSI at 46.03 is Neutral, neither overbought nor oversold. The STOCH value of 52.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for THLLY.
Thales SA Unsponsored ADR Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $100.33B | 19.57 | 26.50% | 1.55% | -0.14% | 72.35% | |
75 Outperform | $65.90B | 47.45 | 8.28% | 1.61% | 2.83% | 47.00% | |
74 Outperform | $93.50B | 21.58 | 17.57% | 1.73% | 11.86% | 17.39% | |
74 Outperform | $144.36B | 22.26 | 80.53% | 2.77% | 2.88% | -35.15% | |
66 Neutral | $57.72B | 29.37 | 22.17% | 1.40% | 11.77% | -50.07% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
56 Neutral | $153.24B | 74.05 | -94.94% | ― | 10.19% | -6.03% |
* Industrials Sector Average
THLLY
Thales SA Unsponsored ADR
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8.89%
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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.