| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 8.13 | -98 |
| Intrinsic value (DCF) | 644.38 | 34 |
| Graham-Dodd Method | 46.27 | -90 |
| Graham Formula | 156.76 | -67 |
Elbit Systems Ltd. (NASDAQ: ESLT) is a leading global defense technology company headquartered in Haifa, Israel, specializing in aerospace, land, and naval systems. With a diversified portfolio spanning military and commercial aviation, unmanned systems, electro-optics, cybersecurity, and precision munitions, Elbit serves governments and defense contractors worldwide. The company operates as a prime contractor or subcontractor, leveraging its expertise in command, control, communications, and intelligence (C4ISR) solutions. Elbit’s innovation-driven approach positions it as a key player in the $2.2 trillion global defense market, with a strong presence in the U.S., Europe, and Asia-Pacific. Its focus on autonomous systems, electronic warfare, and survivability technologies aligns with modern defense priorities, ensuring sustained demand. With a market cap of ~$16.9B and a track record of government contracts, Elbit is a critical supplier for Israel’s defense ecosystem and allied nations.
Elbit Systems presents a compelling investment case due to its niche expertise in high-demand defense technologies, stable government contracts, and global diversification. The company’s negative beta (-0.35) suggests low correlation with broader markets, offering defensive appeal. Revenue of $6.8B and net income of $321M reflect steady profitability, though margins are pressured by R&D and geopolitical risks. Diluted EPS of $7.18 and a dividend yield of ~1.2% (based on a $2.10/share payout) provide income potential. However, reliance on government budgets and geopolitical tensions in Israel introduce volatility. Strong operating cash flow ($535M) supports reinvestment, but debt ($1.37B) and capex ($215M) require monitoring. Investors should weigh its technological moat against cyclical defense spending.
Elbit Systems competes in the mid-tier defense sector, differentiating itself through integrated solutions and agility compared to larger primes. Its strengths include expertise in unmanned systems (e.g., Hermes drones) and electronic warfare, where it rivals larger players like Lockheed Martin but with lower overhead. The company’s focus on C4ISR and cyber intelligence aligns with modern warfare trends, though it lacks the scale of Boeing or Northrop Grumman in aircraft platforms. Elbit’s Israeli origin grants it unique access to battle-tested technologies and niche contracts (e.g., Iron Dome components), but U.S. competitors dominate Pentagon budgets. Its electro-optics division competes with L3Harris, while its aerostructures business faces pressure from commercial aviation downturns. Strategic partnerships (e.g., joint ventures with U.S. firms) mitigate competition, but consolidation among rivals could threaten its subcontractor role. The company’s innovation in autonomous systems and AI-driven defense provides a edge, but reliance on geopolitical instability for demand is a double-edged sword.