Rankings Defence, aerospace & space BAE Systems
BAE Systems
77
15070100
A view of the same findings, not a new score. How it works
A strong score: the model found few serious problems, but analysts see limited upside from here.
Biggest deductions
- Multiples vs own history−6
- Margin−3
- FCF yield adjusted for prepayments−3
Strengths
- Raised guidance+3
- Distribution covered by FCF+1
How the score is built
From 100 to 77, step by step: points off for the business, the price and the cracks, back for documented strengths, then three data adjustments.
Start
Score
Hover or select a step to see what drove it. Steps with findings open them below.
Key numbers
As of 3 Nov 2026. Analyst targets tend to be optimistic; read upside as a hint, not a forecast.
- Price
- 2,061 GBP
- Median analyst target
- 2,338 GBP
- Upside to median
- +13.4%
- Analysts
- 20
- Target range
- 1,700 – 2,620 GBP
- 52-week change
- +11%
- P/E (trailing)
- 29.5
- Forward P/E
- 23.1
- PEG
- 1.87
Findings
Every deduction and every plus, with its source. Open a step to read them.
Business
Is the company getting stronger, not just bigger? · 2 findings−5 of −30
- −3MarginUnderlying return on sales was 10.8% in H1 2026 vs 10.6% the year before, and operating margin is 9.9% TTM. Despite a defence boom and a record order book, the margin is almost standing still: the company is getting bigger, not markedly stronger.
- −2ROIC and capital allocationROIC is 13.7% TTM vs 12.7–16.5% in 2021–25, so no improvement. The purchase of Ball Aerospace for GBP 4.8bn in 2024 lifted goodwill to GBP 12.9bn and debt to over GBP 9bn.
Price
Today's multiples against the company's own history and its peers. · 2 findings−9 of −35
- −6Multiples vs own historyForward P/E 21.5 vs 11.0–21.0 in 2021–25 and P/B 4.4 vs 2.3–4.3: both are records. EV/EBITDA 14.3 is in the upper half of 9.6–16.3. The re-rating from 'boring' defensive stock to growth stock is fully priced in.
- −3FCF yield adjusted for prepaymentsThe guided 2026 FCF (>£2.0bn) gives an FCF yield of about 3.7% at a market cap of £54.7bn, i.e. P/FCF about 27. Stockanalysis' P/FCF of 11.6 is based on TTM FCF, which is inflated by prepayments.
Cracks
Cash flow, customers, debt, insiders, guidance and what sits behind the headline numbers. · 4 findings−9 of −35
- −3Cash flow (customer prepayments)FCF of £1,791m in H1 2026 (vs −£368m) came from a high level of customer prepayments. The cumulative FCF guidance for 2025–27 and 2026–28 is unchanged, so the cash has merely been brought forward and will flow back in the coming years. Contract liabilities have risen to £7.9bn.
- −2Execution (Maritime)Maritime (submarines and ships) had an operating margin of only 6.7% in 2025 vs guidance of about 8%; Deutsche Bank downgraded to hold for that reason and explains it with milestone timing and more first-in-class programmes. Large fixed-price contracts such as Dreadnought and AUKUS carry execution risk.
- −2Customer concentration and budgetThe customers are a few governments (UK, US, Saudi Arabia). According to The Times, the British government is considering delaying the timetable for 3% of GDP on defence, and the stock fell on the news. The stock is about 21% below the March peak and −1% over 52 weeks.
- −2DebtNet debt is GBP 4.95bn (gross debt GBP 9.15bn) and 2.3 times EBITDA in gross debt, after the Ball acquisition. The cash of GBP 4.2bn is lifted by advance payments, so the adjusted net debt is higher.
Plus
Only documented strengths. · 2 findings+4 of +15
- +3Raised guidance2026 guidance was raised on all points in July: sales +8–10% (from 7–9%), EBIT +10–12% (from 9–11%), EPS +11–13% (from 9–11%) and FCF above £2.0bn (from above £1.3bn). Order intake in H1 was £16.4bn, and the order book is a record £84bn.
- +1Distribution covered by FCFDividend (GBP 1,091m) and buybacks (GBP 522m) TTM total about GBP 1.6bn, below the guided normal FCF of over GBP 2.0bn. The share count has fallen 0.5% in a year, and the dividend has been raised 21 years in a row.
Caveats
What the score does not capture, or where the data is weak.
The share price is in pence (GBX), the financial figures in pounds. TTM FCF of £4.7bn and P/FCF 11.6 at stockanalysis are lifted by customer prepayments in H1 2026. Cumulative FCF guidance for 2025–27 and 2026–28 is unchanged, so the prepayments are cash brought forward. T2 therefore uses the guided FCF (>£2.0bn). The amount of the prepayments is not disclosed. Pension, US segment margins, F-35 production and export risk to Saudi Arabia are not examined in detail. No insider trades are examined. The report on a delayed British defence budget is based on press coverage (The Times).
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