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BAE Systems plc ADR
(OTC:BAESY)
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Rating:72Outperform
Price Target:
$110.00
â–²(10.09% Upside)
Action:Upgraded
Date: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 and order visibility
A GBP 84bn backlog equal to ~3x annual sales and strong order intake provide multi-year contracted revenue visibility. This durable backlog supports production planning, long-term capacity utilization and predictable revenue conversion, reducing top-line volatility and supporting margin leverage.
Negative Factors
Rising total debt levels
An increase in gross debt to roughly $10–10.5B reduces balance-sheet flexibility even if net-debt metrics have improved. Higher absolute leverage elevates interest and refinancing exposure and makes the company more dependent on consistent cash generation to fund dividends, capex and strategic moves.
Read all positive and negative factors
Positive Factors
Negative Factors
Record backlog and order visibility
A GBP 84bn backlog equal to ~3x annual sales and strong order intake provide multi-year contracted revenue visibility. This durable backlog supports production planning, long-term capacity utilization and predictable revenue conversion, reducing top-line volatility and supporting margin leverage.
Read all positive factors
BAE Systems plc ADR (BAESY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$72.60B
Dividend Yield1.89%
Average Volume (3M)41.53K
Price to Earnings (P/E)27.2
Beta (1Y)0.58
Revenue Growth11.09%
EPS Growth10.75%
CountryUS
Employees107,400
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)2.72
Shares Outstanding751,387,450
10 Day Avg. Volume20,223
30 Day Avg. Volume41,526
Financial Highlights & Ratios
PEG Ratio3.19
Price to Book (P/B)4.38
Price to Sales (P/S)1.82
P/FCF Ratio22.15
Enterprise Value/Market Cap0.83
Enterprise Value/Revenue2.13
Enterprise Value/Gross Profit8.07
Enterprise Value/Ebitda16.02
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)4.42
Revenue Forecast (FY)$44.06B
BAE Systems plc ADR Business Overview & Revenue Model
Company Description
BAE Systems plc is a global defense, aerospace, and security enterprise. Its extensive operations are structured across five principal divisions. The Electronic Systems segment develops and supplies a wide array of advanced electronic solutions, i...
How the Company Makes Money
BAE Systems primarily makes money by contracting with government defense ministries and agencies to deliver defense platforms, mission systems, and long-term support services. Its revenue model is built around: (1) Platform and systems programs: m...
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 | 28.34B | 26.31B | 23.08B | 21.26B | 19.52B |
| Gross Profit | 7.48B | 17.23B | 15.10B | 2.77B | 2.50B |
| EBITDA | 3.69B | 3.97B | 3.45B | 3.06B | 3.13B |
| Net Income | 2.06B | 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 | 9.05B | 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
Negative
99.92
Price Trends
103.30
Negative
109.93
Negative
104.26
Negative
Market Momentum
-0.50
Negative
45.73
Neutral
37.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BAESY, the sentiment is Negative. The current price of 99.92 is above the 20-day moving average (MA) of 99.69, below the 50-day MA of 103.30, and below the 200-day MA of 104.26, indicating a bearish trend. The MACD of -0.50 indicates Negative momentum. The RSI at 45.73 is Neutral, neither overbought nor oversold. The STOCH value of 37.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $101.43B | 23.25 | 17.41% | 1.73% | 9.35% | 10.49% | |
72 Outperform | $72.60B | 27.22 | 18.23% | 1.89% | 11.09% | 10.75% | |
69 Neutral | $54.17B | 31.40 | 8.87% | 1.61% | 5.79% | 9.31% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $76.65B | 16.86 | 28.05% | 1.55% | 4.95% | 26.05% | |
61 Neutral | $11.27B | 18.59 | 12.05% | 1.53% | 12.08% | 10.89% | |
59 Neutral | $120.64B | 25.22 | 74.53% | 2.77% | 4.59% | -10.76% |
* Industrials Sector Average
BAESY
BAE Systems plc ADR
99.29
-1.69
-1.67%
GD
General Dynamics
375.06
75.50
25.20%
LHX
L3Harris Technologies
290.77
32.64
12.65%
HII
Huntington Ingalls
286.09
31.88
12.54%
LMT
Lockheed Martin
523.22
62.09
13.46%
NOC
Northrop Grumman
539.63
26.56
5.18%
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.