Elbit Systems Spikes On Results; Middle East Wars Drive 'Material' Demand Growth

Elbit Systems stock rallied Tuesday after the Israel-based defense contractor cleared estimates for Q4 results, driven by higher demand and sales amid the upheaval in the Middle East.

Elbit Systems (ESLT) reported a 76% increase in earnings to $3.52 per share, trouncing estimates for $2.82 per share. Revenue increased 11.3% to $2.15 billion, also ahead of FactSet expectations for $2.099 billion.

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The company’s Command, Control, Communications, Computers, Intelligence (C4I) and Cyber segment revenue increased by 19%, driven by sales of radio systems and command and control systems to Europe and Israel. The Intelligence, Surveillance, Target Acquisition, and Reconnaissance (ISTAR) and Electronic Warfare (EW) division revenue jumped 39% from higher sales of maritime systems, electro-optic systems and counter-unmanned aircraft systems (C-UAS). Land revenue surged 22% from ammunition and munition sales to Israel and Europe.

Elbit Systems of America revenue rose 9% due to increased sales of night-vision systems and maritime systems, partially offset by a decline in medical device sales. Aerospace revenue fell 14% from a decrease in training and simulation sales in Europe, as well as difficult year-over-year comparisons for Precision Guided Munition (PGM) sales during the quarter.

Middle East Conflicts Drive Demand

The company noted it has experienced a “continued material increase” in demand from the Israel Ministry of Defense since Israel’s war on Palestine in October 2023, which has been bolstered by the war against Iran.

“Such increased demand may continue and could generate material additional orders to the company,” Elbit said.

However, Elbit said it experienced supply chain disruptions and operational constraints, such as increased transportation costs and logistical delays from attacks in the Red Sea. There have also been material shortages and some of Elbit’s employees have been called for reserve duty, while some countries have imposed limits on engagement with Israel, according to the company.

Elbit said it has taken various steps to support production increases and mitigate supply chain disruptions. Ceasefire agreements provided some reprieve, but things could escalate again.

The company also declared a dividend of $1 per share, which is payable on April 27.

Elsewhere, Elbit Systems on Monday announced it won a $49.9 million contract from the U.S. Army to produce heads up displays (HUDs) for UH-60 BlackHawks and CH-47 Chinooks, as part of the Air Soldier System. The contract runs through December 2030, according to the release.

Elbit Systems Stock

ESLT stock jumped 16% Tuesday to notch a record high, clearing its previous peak of 960 from March 3.

Shares have already rallied more 75% this year.

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