Al Root
The international situation and defense-spending trends are benefiting contractors outside of the U.S. The latest results from the Israeli defense contractor Elbit Systems make it clear.
On Wednesday, the Haifa, Israel-based company reported second-quarter earnings per share of $2.69, up from the $1.76 it achieved in the second quarter of 2024 and comfortably above the $2.41 Wall Street was expecting.
Sales, at just under $2 billion, were up from $1.6 billion a year ago. The consensus forecast among analysts was for $1.9 billion.
Elbit ended the quarter with a backlog of work totaling $23.8 billion, up 13% year over year.
It looks like a solid quarter. Elbit stock was up 5.8% in early trading at $462.42, while the S&P 500 and Dow Jones Industrial Average rose 0.4% and 1%, respectively.
Elbit "continues its upward momentum, driven by sustained demand for its proven technologies and solutions," said CEO Bezhalel Machlis in a news release. "The Company's long-term strategy and investments have positioned the Company for continued future growth." He said the company's robust presence in Europe, built through subsidiaries, production infrastructure, and strategic partnerships, has positioned it to win major contracts that reinforce ties with customers.
Elbit manufactures sensors and systems for land, sea, and air defense. It also makes drones, which have received a lot of investor attention lately. The company generates roughly 30% of its sales in Israel, with another 25% coming from Europe, and 20% from North America.
Sales in 2025 are expected to be about $7.8 billion. Lockheed Martin, for comparison, will generate almost 10 times that amount. Germany's Rheinmetall is expected to generate almost $15 billion in sales.
Coming into Wednesday trading, Elbit stock was up about 69% year to date and 130% over the past 12 months, benefiting from increased spending promised in Europe and escalating tensions between Iran and Israel.
Wall Street hasn't been able to keep up with the recent gains. The average analyst price target for Elbit stock is about $414, about $23 lower than Tuesday's closing level.
Four analysts cover the stock. That isn't a lot. The typical U.S. industrial stock in the S&P 500 has about 22 analysts covering it. One out of four, or 25%, rate Elbit shares Buy, according to FactSet. The average Buy-rating ratio for the industrial stocks in the S&P 500 is about 50%.
The gains also mean Elbit stock isn't cheap. Shares trade for about 32 times the per-share earnings expected for 2026. The stock has traded for an average of closer to 25 times earnings over the past few years.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
August 13, 2025 10:10 ET (14:10 GMT)
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