BAE Systems plc
🇬🇧 BA.LSE · London · GB0002634946
Industrials
GBX 2289.00 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
33.6
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 2289.00 ÷ 68.03 = 33.6
TTM period through: 2025-12-31
Forward P/E (estimated): 24.4
Based on analyst estimates
Reference: Provider P/E (Trailing): 33.7
Yield (Fwd)
1.57%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 1.58%
Net Debt/EBITDA (TTM)
1.9x
Latest quarter: 3.7x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2025-12-31): 3.7x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
52.9%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 49.8%
Cash Flow Payout (TTM): 31.1%
FCF Coverage (TTM): 2.32x
ROE
18.1%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
17.2x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
BAE Systems is a dominant global defense contractor with highly secure cash flows backed by long-term government contracts and a wide economic moat. While the underlying business is of exceptional quality, current valuations at a P/E over 33 and a low 1.58% yield offer limited upside. Existing shareholders should maintain positions given the strong fundamentals, but new investors may want to wait for a better entry point.
Sector Context
BAE Systems operates in the industrials sector, specifically as a leading global aerospace, defense, and security contractor. While not a traditional consumer utility, large defense contractors often operate as quasi-monopolies with massive barriers to entry and reliable, long-term government contracts, making their underlying cash flows highly predictable and well-suited for long-term dividend growth.
📊 Strategy Analysis
- • Premier global defense contractor with a wide economic moat and a massive order backlog, ensuring highly predictable long-term government revenues.
- • Excellent dividend sustainability, supported by strong free cash flow that covers the dividend 2.32 times alongside a conservative cash flow payout of 31.14%.
- • Solid balance sheet with a Net Debt/EBITDA of 1.94x, remaining comfortably below the 3x threshold for industrial companies.
⚠ What to Watch
- • Significantly overvalued at a TTM P/E of 33.65, which far exceeds the strategy's ideal 8-15x valuation range.
- • The current dividend yield of 1.58% falls well below the 3% minimum threshold desired for income-focused portfolios.
- • Current record-high pricing heavily reflects escalating geopolitical tensions, limiting potential upside and presenting a poor margin of safety.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-04
Disclaimer: This information is for educational purposes only. Not financial advice.