Elbit Systems surges 13% on earnings beat, backlog growth
Israel-based defense contractor expands margins as international orders climb to $28.1 billion
Elbit Systems shares surged to record highs on Tuesday after the Israel-based defense contractor reported quarterly earnings that exceeded analyst expectations, driven by expanding margins and a growing international order backlog.
The stock jumped 13% to $977.56 in afternoon trading, marking a new 52-week high and pushing the company's market capitalization above $40 billion. The rally follows the release of fourth-quarter 2025 results showing adjusted earnings per share of $3.56, beating the consensus estimate of $3.09.
Revenue for the quarter climbed 11.3% year-over-year to $2.148 billion, narrowly missing analyst projections of $2.151 billion. The company's profitability improved significantly, with adjusted gross margin expanding to 25% from 24.5% a year earlier and adjusted operating margin rising to 9.8% from 8.2%.
The most striking figure in the earnings report was the order backlog, which swelled to $28.1 billion as of December 31, 2025. Perhaps more importantly for investors, the backlog is increasingly international, with 72% coming from outside Israel. More than half of the orders are scheduled for delivery in 2026 and 2027, providing strong visibility for future revenue.
"International demand continues to drive our growth," the company said in its earnings release, noting that segment performances were robust across key divisions. C4I and Cyber revenues rose 19% year-over-year, while ISTAR and EW revenues surged 39%. Land systems revenue increased 22%, and the company's American subsidiary posted a 9% revenue gain. Aerospace was the only segment to decline, falling 14%.
The results come amid heightened global defense spending as countries worldwide modernize their military capabilities in response to geopolitical tensions. Elbit's international diversification has positioned it to benefit from this trend, with particular strength in Europe and North America.
Cash flow generation showed marked improvement. Operating cash flow for the full year totaled $778.4 million, compared to $534.6 million in the prior year. The company also declared a dividend of $1.00 per share, payable on April 27 to shareholders of record on April 13.
Elbit invested over $500 million in research and development during the period, focusing on disruptive technologies including artificial intelligence enhancements across its product portfolio. This heavy R&D investment underscores the company's strategy to maintain technological leadership in an increasingly competitive defense market.
Despite today's surge, the stock appears expensive relative to analyst targets. The consensus price target stands at $566.50, according to market data, suggesting significant upside could be priced into the shares. However, the company's forward price-to-earnings ratio of 9.66 indicates investors are expecting strong earnings growth ahead, supported by the robust backlog.
The rally reflects growing confidence in Elbit's ability to convert its order book into profitable growth. With 54% of the backlog scheduled for 2026 and 2027, analysts will be watching closely for execution risk and margin trends as the company ramps up production to meet international demand.
Tuesday's gain extends Elbit's strong performance over the past year, with the stock more than doubling since March 2025. The company's market capitalization of approximately $40.5 billion now places it among the larger publicly traded defense contractors globally.
Investors will be focused on the company's guidance for 2026 and commentary on supply chain dynamics when management hosts its earnings conference call later this week. With global defense budgets expected to remain elevated, Elbit's international exposure and technological capabilities could continue to support growth.