BAE Systems (BA) AI Stock Analysis

• Market Cap: $47.04B
• Dividend Yield: 1.92%
• Average Volume (3M): 12.19M
• Price to Earnings (P/E): 24.1
• Beta (1Y): 0.67
• Revenue Growth: 14.01%
• EPS Growth: 6.03%
• Country: UK
• Employees: 107,400
• Sector: Industrials
• Sector Strength: 73
• Industry: Aerospace & Defense
• EPS (TTM): 0.65
• Shares Outstanding: 3,006,642,600
• 10 Day Avg. Volume: 18,970,929
• 30 Day Avg. Volume: 12,190,403
• PEG Ratio: 4.00
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.92
• Price to Cash Flow (P/CF): 31.20
• P/FCF Ratio: 51.40
• 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: 1,540.55p
• Price Target Upside: -2.22% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

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

Financial Performance

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

Orders and Contracts

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

US Defense Program Concerns

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

BAE Systems Business Overview & Revenue Model

Company Description

BAE Systems plc is a British multinational defense, security, and aerospace company headquartered in London, United Kingdom. The company operates across several sectors including air, land, maritime, and cyber security, offering a wide range of products and services such as military aircraft, naval ships, submarines, combat vehicles, electronics, and cyber intelligence. BAE Systems is recognized as one of the world's largest defense contractors, serving governments and commercial customers globally.

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: 1575.50
• 50DMA: Positive
• 100DMA: Positive
• 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 1575.5 is above the 20-day moving average (MA) of 1410.27, above the 50-day MA of 1285.48, and above the 200-day MA of 1285.73, indicating a bullish trend. The MACD of 95.66 indicates Negative momentum. The RSI at 67.96 is Neutral, neither overbought nor oversold. The STOCH value of 60.17 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
SMIN	76 Outperform	£6.78B	27.67	10.84%	2.19%	3.13%	13.36%
BA	74 Outperform	$47.04B	24.13	17.85%	1.92%	14.01%	6.03%
BAB	74 Outperform	£3.51B	18.57	44.03%	0.74%	3.34%	481.76%
RR	72 Outperform	$62.29B	24.56		―	14.70%	3.76%
Sector *	62 Neutral	$8.27B	12.81	0.55%	3.01%	3.90%	-15.60%