Breaking Down Elbit Systems Ltd. (ESLT) Financial Health: Key Insights for Investors

You're looking at Elbit Systems Ltd. (ESLT) right now, trying to map its financial trajectory against a volatile global defense landscape, and honestly, the Q3 2025 numbers give us a clear but complex picture. The headline is the sheer scale of future visibility: the order backlog hit a record $25.2 billion as of September 30, 2025, up 14% year-over-year, which is a massive buffer against geopolitical uncertainty and provides a strong foundation for the consensus 2025 full-year revenue estimate of $7.95 billion. The company beat on the bottom line, delivering Non-GAAP earnings per share (EPS) of $3.35, handily surpassing analyst expectations, but revenues of $1.92 billion for the quarter did slightly miss the Street's forecast, suggesting some execution pressure, especially with Aerospace revenues dipping 3%. Still, the Land segment is on fire, climbing 41% year-over-year, and with roughly 69% of that enormous backlog coming from outside Israel, the company is defintely capitalizing on the sustained surge in European defense spending; that's the real story here, and it's why we need to dig into what's driving the segment-level growth and what that $25.2 billion means for cash flow over the next few years.

Revenue Analysis

You need to know if Elbit Systems Ltd. (ESLT) is just riding a defense spending wave or if its growth is structurally sound. The answer is a mix: the company is posting double-digit revenue growth, fueled by global conflict, but the most telling sign is the record-breaking order backlog that provides visibility for years to come.

For the last twelve months (LTM) ending September 30, 2025, Elbit Systems Ltd. (ESLT) reported total revenue of $7.7 billion, an impressive 18% increase over the comparable period in 2024. The Q3 2025 revenue alone came in at $1.92 billion, a solid 12% jump year-over-year. That kind of growth is defintely not a fluke; it signals sustained demand for their advanced defense technology, from unmanned systems to electro-optics.

Understanding Elbit Systems Ltd.'s Primary Revenue Streams

Elbit Systems Ltd.'s revenue is well-diversified across five primary business segments, which helps mitigate risk if one area slows down. The largest contributors are Land and Aerospace, each pulling in over a quarter of the total revenue as of the LTM period ending Q3 2025. The company's massive, record-high order backlog of $25.2 billion as of September 30, 2025, is the true indicator of future revenue stability, representing more than three times its annual sales.

Here's the quick math on how the segments contributed to the overall revenue base in the LTM period ending Q3 2025:

Segment Shifts and Geographical Opportunities

The most significant change in the Q3 2025 results was the explosive growth in the Land segment, which surged by 41% year-over-year. This was driven by high demand for ammunition and munitions, especially in Israel and Europe, reflecting the current geopolitical landscape.

On the flip side, the Aerospace segment saw a slight revenue decrease of 3% in Q3 2025, primarily due to a drop in Precision Guided Munition (PGM) sales in the Asia-Pacific region. This shows you that even with overall growth, regional sales cycles and specific product demand can create near-term volatility in certain segments. The good news is that the Aerospace decline was partially offset by an increase in Unmanned Aerial System (UAS) sales in Europe.

Geographically, Elbit Systems Ltd. is becoming increasingly international. While Israel still accounts for the largest share at 33% of Q3 2025 revenue, Europe is a close second at 28%, and North America contributes another 21%. This global footprint is critical, as 69% of the company's massive backlog is derived from orders outside of Israel, with new European contracts being a major growth driver. The market is clearly shifting toward Europe, and Elbit Systems Ltd. is positioned to capture that spending. Want to know more about the company's long-term strategy? You can read about their Mission Statement, Vision, & Core Values of Elbit Systems Ltd. (ESLT).

To capitalize on this trend, your action item is simple: Monitor the Land and C4I & Cyber segments, which grew 41% and 14% respectively in Q3 2025, for continued contract announcements, as they are the clear near-term growth engines.

Profitability Metrics

You are looking at Elbit Systems Ltd. (ESLT) right now because the defense sector is booming, and you want to know if that top-line revenue growth is actually translating into better operating efficiency. The short answer is yes: Elbit Systems Ltd.'s Q3 2025 results show a significant expansion across all key profitability metrics, defintely outpacing the industry's general struggle with supply chain constraints. This margin growth is a clear signal of strong operational execution.

For the third quarter of 2025, Elbit Systems Ltd. posted a Non-GAAP gross margin of 25.2%, up from 24.4% in the same quarter a year prior. More importantly, the Non-GAAP operating margin saw a substantial jump from 8.2% to 9.7%, which is a strong indicator of management's ability to control costs below the gross profit line (selling, general, and administrative expenses). This focus on cost control, coupled with rising sales, pushed the Non-GAAP net margin to 8.3%, a significant improvement from the 5.8% recorded in Q3 2024. Here's the quick math on the margin movement:

The trend in profitability is unambiguously positive, driven by strong demand in specific segments. The Land segment, for example, saw a massive 41% revenue increase in Q3 2025, primarily from ammunition and munition sales in Europe and Israel. This volume leverage is the core driver of the improved gross margin. Also, the company is getting more efficient with its expense management, which is crucial. We see this in the drop in research and development (R&D) expenses as a percentage of revenue, moving from 7.0% down to 6.7%, and marketing and selling expenses dropping from 5.3% to 4.7% of revenues. That's a sign of a well-oiled machine.

When you compare these ratios to the broader Aerospace & Defense (A&D) industry, Elbit Systems Ltd.'s margin expansion is particularly notable. While the A&D sector is seeing high demand, many peers are struggling with persistent production backlogs and supply chain bottlenecks that constrain output and cap margin potential. Elbit Systems Ltd.'s ability to expand its gross margin from 24.0% (GAAP) to 24.9% (GAAP) in this environment suggests effective supply chain management and pricing power. Plus, the record-high order backlog of $25.2 billion as of September 30, 2025, provides long-term revenue visibility that few competitors can match.

What this estimate hides is the potential for future margin pressure if the mix of sales shifts heavily toward lower-margin, high-volume contracts, or if the current geopolitical environment normalizes and slows the pace of new orders. Still, the company's focus on high-tech, integrated systems-like those in the C4I and Cyber segment, which grew 14%-should help maintain a premium margin profile. For a deeper look into the capital behind this growth, you should check out Exploring Elbit Systems Ltd. (ESLT) Investor Profile: Who's Buying and Why?

Your next step is clear: Model a sensitivity analysis for Elbit Systems Ltd.'s net profit, varying the gross margin by $\pm$50 basis points to understand the impact on your target price.

Debt vs. Equity Structure

Elbit Systems Ltd. (ESLT) maintains a remarkably conservative capital structure, which is a strong signal for investors prioritizing financial stability. You want to see a company that can fund its growth without taking on excessive risk, and Elbit Systems Ltd. defintely fits that bill. As of the second quarter of 2025, the company's debt-to-equity (D/E) ratio stood at approximately 0.31, indicating a healthy reliance on shareholder equity over borrowing.

Here's the quick math on their financing mix for Q2 2025, which shows a clear preference for equity funding (shareholders' equity) over total debt:

• Total Debt: $1.24 billion
• Equity Capital and Reserves: $3.95 billion

This low D/E ratio of 0.31 is significantly below the typical industry average of 0.38 for the Aerospace & Defense sector as of November 2025, positioning Elbit Systems Ltd. as one of the least leveraged players in its peer group. A low ratio means the company has a large equity cushion to absorb potential business shocks.

The total debt of $1.24 billion is split between long-term and short-term obligations, and it's the short-term component that makes up the bulk of the current figure.

What this estimate hides is the nature of the short-term debt, which is often tied to working capital needs for large, long-cycle defense contracts. The company's strong current ratio of 1.29 for the TTM period suggests it can comfortably cover these near-term liabilities.

The market has taken notice of this financial discipline. In June 2025, S&P Global Ratings Maalot, an Israeli rating agency, raised Elbit Systems Ltd.'s long-term rating to 'ilAA+' (Local Scale) with a stable outlook. They also reaffirmed the short-term rating at 'ilA-1+'. This upgrade reflects the company's strong operating performance and record-high backlog of $25.2 billion as of September 30, 2025, which provides excellent visibility on future cash flows to service any debt. This is a clear vote of confidence from a credit perspective.

The company's approach is to use equity funding-retained earnings and capital from shareholders-as its primary source of financing, keeping its leverage low. Debt is used strategically, often for specific, manageable purposes like capital expenditure or acquisitions, rather than as a core driver of general operations. For a deeper dive into the strategic direction underpinning this financial strength, you should review the Mission Statement, Vision, & Core Values of Elbit Systems Ltd. (ESLT).

The key takeaway here is that Elbit Systems Ltd. is not chasing growth with borrowed money; it's funding expansion with strong operational cash flow and a conservative balance sheet.

Liquidity and Solvency

Elbit Systems Ltd. (ESLT) shows a strong liquidity position that is typical for a defense contractor with massive, long-cycle contracts, but you need to look past the healthy Current Ratio to the Quick Ratio to see the real working capital dynamics. The key takeaway is that the company is generating significant cash from operations in 2025, with cash flow provided by operating activities soaring to $461.0 million in the first nine months of the year.

Current and Quick Ratios: The Inventory Factor

When assessing short-term financial health, we look at the Current Ratio (current assets divided by current liabilities) and the Quick Ratio (acid-test ratio), which strips out inventory. Elbit Systems' Current Ratio for the quarter ending June 30, 2025, stood at a solid 1.29. This means the company has $1.29 in current assets for every dollar of current liabilities, suggesting it can comfortably cover its near-term debts.

But here's the quick math: The Quick Ratio for the same period was only 0.77. This is a significant drop and tells you that a large portion of the current assets is tied up in inventory-a common situation in the defense industry where long-term projects require holding substantial raw materials and work-in-progress. Honestly, a Quick Ratio below 1.0 is something to watch, as it means liquid assets alone can't fully pay off current liabilities.

• Current Ratio (Q2 2025): 1.29
• Quick Ratio (Q2 2025): 0.77
• Industry Median Quick Ratio: 1.24 (ESLT is defintely below this)

Working Capital Trends and Backlog Strength

The low Quick Ratio is directly tied to the company's working capital structure, which is being stretched by its massive growth. Elbit Systems' order backlog reached a record $25.2 billion as of September 30, 2025. Fulfilling this backlog requires a huge upfront investment in inventory and work-in-progress, which is why the Quick Ratio is low.

This isn't necessarily a weakness; it's a characteristic of a company successfully securing large, long-term contracts. The risk is manageable because those inventory investments are directly backed by firm, non-cancellable customer orders. What this estimate hides is the certainty of future cash receipts from these contracts.

Cash Flow Statements Overview

The cash flow statement shows the real strength. Cash flow provided by operating activities (CFO) for the nine months ended September 30, 2025, was a very strong $461.0 million, a huge jump from $82.5 million in the same period a year prior. That's a massive improvement in cash generation, driven mainly by the strong increase in net income.

Quarterly free cash flow was also solid at $101 million in Q3 2025. This positive cash generation is crucial for funding capital expenditures (CFI) and shareholder returns (CFF). Speaking of financing, the company has been reducing its average net debt, which helped decrease net financial expenses to $34.5 million in Q3 2025, down from $45.0 million in Q3 2024. Plus, the Board declared a dividend of $0.75 per share, which is a clear sign of management's confidence in the company's sustained cash-generating ability.

For a more detailed look into the company's financial structure, including the full valuation breakdown, check out the full post: Breaking Down Elbit Systems Ltd. (ESLT) Financial Health: Key Insights for Investors.

Liquidity Strengths and Actionable Insight

The primary liquidity strength for Elbit Systems Ltd. is its ability to convert its operational success into cash, as evidenced by the massive increase in CFO. The low Quick Ratio is a structural feature of its business model, not a distress signal, as long as the record $25.2 billion backlog remains firm. The reduction in net debt and the consistent dividend payment further cement the view of a financially stable, albeit inventory-heavy, operation.

Your next step should be to look closely at the inventory turnover rate. If that number is improving, it means the company is getting more efficient at turning those large inventory holdings into revenue and, eventually, cash.

Valuation Analysis

Is Elbit Systems Ltd. (ESLT) overvalued right now? The quick answer is: it's priced for growth, sitting firmly in the high-end of its historical valuation range, which suggests a 'Hold' for most investors unless you believe the current defense spending surge will accelerate. The market is definitely pricing in the company's record backlog and geopolitical tailwinds.

When you look at the core valuation multiples, Elbit Systems Ltd. is not a cheap stock. Its trailing Price-to-Earnings (P/E) ratio is around 40.76 as of November 2025, which is significantly higher than the aerospace and defense industry average. Here's the quick math: investors are paying over 40 times the company's last twelve months of earnings. This multiple tells you the market expects substantial future earnings growth to justify today's price.

The other key metrics tell a similar story of a premium valuation:

• Price-to-Book (P/B) Ratio: The current P/B is approximately 5.81. This is high, showing investors value the company at nearly six times its net asset value, a strong vote of confidence in its intangible assets and future profitability.
• Enterprise Value-to-EBITDA (EV/EBITDA): The forward EV/EBITDA sits at about 24.71. Enterprise Value-to-EBITDA (a measure of a company's total value relative to its earnings before interest, taxes, depreciation, and amortization) is a better cross-industry comparison, and this figure is often considered in the 'Strongly Overvalued' range compared to its five-year average.

To be fair, the defense sector is experiencing a boom, so traditional multiples are stretched across the board. The question isn't just 'is it high?' but 'is it high relative to its growth prospects?'

The stock price trend over the last 12 months shows just how much has been priced in. Elbit Systems Ltd. has seen its stock price soar from a 52-week low of $241.65 to a high of $529.99, representing over 100.2% growth in value over the past year. The latest closing price, as of November 20, 2025, was $468.41. That's a massive run, driven by a record order backlog of $25.2 billion reported in Q3 2025.

For income-focused investors, Elbit Systems Ltd. is defintely not a primary play. The company's dividend yield is low, sitting at about 0.41%. However, the dividend is very sustainable, with a payout ratio of only 24.6%. This means they are reinvesting most of their earnings back into the business-a smart move for a company with high-growth opportunities in a cyclical industry.

The consensus among Wall Street analysts reflects this mixed picture of strong fundamentals but a high price. The average rating is a 'Hold', with a consensus target price of $530.00. This target suggests a modest upside from the current price, but it's not a screaming 'Buy.' The general sentiment is to hold your position and wait for a better entry point, or for the company to execute flawlessly on its enormous order book. For a deeper dive into the company's operational strength, you should check out the full post: Breaking Down Elbit Systems Ltd. (ESLT) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Elbit Systems Ltd. (ESLT) and seeing a record backlog, but in defense, revenue visibility doesn't erase risk. The company's financial health, while strong-evidenced by a Piotroski F-Score of 8-is defintely susceptible to a unique mix of geopolitical and operational pressures.

The core challenge for Elbit Systems Ltd. is balancing massive international growth with acute regional instability. The key takeaway is this: their mitigation strategy is sound, but the external environment remains volatile, creating near-term operational friction despite long-term financial security.

Geopolitical and Market Headwinds

The most immediate external risks stem from the nature of the defense industry itself: sector-specific geopolitical tensions and fluctuating government defense budgets are constant threats. While the current global climate has fueled demand, a swift shift in policy or a sustained ceasefire could lead to slower domestic demand, though management is quick to point out its mitigation efforts.

The other major external risk is a direct impact on the supply chain (a common issue across the industry, to be fair). For example, the Houthi movement attacks on Red Sea shipping have increased transportation costs and caused delays, forcing the company to increase raw material and component inventories to maintain business continuity.

Here's a quick look at the exposure:

• Domestic Demand Risk: Potential slowdown in Israeli defense spending following ceasefires.
• Supply Chain/Logistics: Increased transportation costs and delivery delays due to global shipping disruptions.
• Regulatory Exposure: Limitations imposed by some countries on exports to Israel.

Operational and Strategic Concerns

Operationally, Elbit Systems Ltd. has faced some internal disruption. As of the Q2 2025 report, approximately 5% of employees were called up for reserve duty, which can affect production capacity, though the company has taken steps to protect its employees and support increased production.

Strategically, analysts have raised questions about the sustainability of margin expansion and the performance of certain segments. The Aerospace segment, for instance, saw a 3% revenue decrease year-over-year in the third quarter of 2025, which is a small but notable drag on overall growth.

Mitigation and Financial Resilience

The company's primary risk mitigation is its massive, diversified order backlog. This is a huge buffer. The backlog hit a record $25.2 billion as of September 30, 2025, which provides long-term revenue visibility. Crucially, 69% of this backlog is derived from orders outside of Israel, which directly counters the risk of fluctuating domestic defense demand.

Plus, the company's recent financial strength provides a cushion against operational hiccups. Non-GAAP diluted EPS for Q3 2025 was a strong $3.35, and operating cash flow for the first nine months of 2025 surged to $461 million, up from $82.5 million in the same period last year. That's a huge jump in cash generation capability.

What this estimate hides is that while the Q3 2025 revenue of $1.92 billion beat the year-ago quarter, it still missed the consensus estimate of $1.99 billion, a small sign that supply chain or other factors are impacting their top-line execution.

Here is how the backlog provides a clear runway:

For a deeper dive into the company's performance metrics, you can read the full analysis at Breaking Down Elbit Systems Ltd. (ESLT) Financial Health: Key Insights for Investors.

Next Step: Review the Q4 2025 guidance when available to see if the Aerospace segment trajectory has been corrected.

Growth Opportunities

You're looking at Elbit Systems Ltd. (ESLT) and seeing a defense giant, but the real question is how they keep growing when the stock already reflects a lot of geopolitical tension. The short answer is through a massive, locked-in order book and a strategic pivot to Europe, which is defintely paying off.

The core of their near-term growth is the backlog, which hit an astounding $25.2 billion as of September 30, 2025. That's a huge cushion. This backlog, which is up significantly year-over-year, provides clear revenue visibility for years to come, and about 69% of those orders are from outside Israel, insulating them from domestic budget shifts. This is the kind of pipeline that lets management sleep well at night.

Future Revenue Growth and Earnings Estimates

The market consensus for the 2025 fiscal year revenue is strong, projecting around $7.95 billion. This growth is translating directly to the bottom line, with consensus earnings per share (EPS) estimates for the full fiscal year sitting at approximately $11.83. Here's the quick math: that revenue estimate represents a solid double-digit year-over-year climb, driven by the execution of those large, long-term contracts.

To be fair, a high price-to-earnings (P/E) ratio suggests the market is already pricing in a lot of this growth, but the sheer size of the new contract wins validates the optimism. For instance, the company recently announced a single, strategic international contract worth approximately $2.3 billion, to be performed over eight years, which immediately adds stability to future revenue streams.

Strategic Moves and Competitive Edge

Elbit Systems Ltd. is not just riding a wave of defense spending; they are actively driving growth through strategic initiatives and product innovation. Their push into Europe is a key market expansion, with the region contributing 28% of Q3 2025 revenues. They are setting up local units in places like Sweden and Germany, which helps them secure contracts that favor local production, effectively acting as a domestic player in those markets.

• Invest in R&D: Allocate funds to directed energy weapons and advanced electro-optics.
• Execute M&A: Continue a value-creating Mergers & Acquisitions strategy, with an eye toward further U.S. acquisitions to strengthen their North American presence.
• Secure Domestic Upgrades: Win major domestic contracts, like the approximately $210 million deal for the upgrade of Merkava Main Battle Tanks, which includes advanced, AI-enhanced electro-optical sights.

Their competitive advantage lies in their unique technological capabilities, which are battle-tested and span multiple domains: airborne, land, naval, and cyber. They are a systems integrator, meaning they don't just sell a part; they deliver a complete, integrated solution for the modern battlefield. This comprehensive portfolio, from unmanned aerial systems (UAS) to advanced land systems, makes them a one-stop shop for governments raising their defense budgets.

If you want a deeper dive into the valuation and risk factors behind these numbers, check out Breaking Down Elbit Systems Ltd. (ESLT) Financial Health: Key Insights for Investors. Finance: track the Q4 order intake and compare it to the full-year revenue estimate to gauge execution risk.