In-line with my previous predictions, Israel-based Elbit Systems’ (ESLT) revenue from its home country is growing rapidly, and that trend is likely to continue for the foreseeable future. Meanwhile, despite a great deal of anti-Israel sentiment in Europe, the company continues to perform well on that continent.
Finally, Elbit is making commendable progress in developing its very promising airborne laser system, and it reported excellent first-quarter financial results, while its valuation is quite low.
In light of these points, investors should consider buying ESLT stock.
Big Growth in Israel and Europe
As I noted in a previous column, Israel plans to shell out more than $100 billion in the next decade “to build an independent Israeli munitions industry,” in the words of Prime Minister Benjamin Netanyahu. As I predicted, Elbit is benefiting meaningfully from this initiative. In Q1, its revenue from Israel jumped 34% versus the same period a year earlier to $818 million.
And last quarter, the company obtained several new, significant contracts from the Israel Defense Forces (IDF), including a $183 million deal to provide the IDF with ammunition, along with a $100 million contract that involves digital capabilities for the army, and an agreement to extend the range of the country’s F-35 fighter jets.
Moving to Europe, Elbit’s revenue from the continent climbed 12% year-over-year in Q1 to $512.3 million. Moreover, Elbit on May 26 announced that it had obtained a five-year deal worth about $1.4 billion from a European country to furnish many systems, “extensively modernize its military,” and “provide improved maneuverability and survivability spanning the entire battle domain,” CEO Bezhalel Machlis stated on the firm’s Q1 earnings call
“We are seeing strengthening demand trends,” the CEO added.
The Very Promising Airborne Laser System Release Timing
Parts of Elbit’s airborne laser, which Machlis indicated can effectively counter both drones and missiles, will be delivered “quite soon, ” the CEO reported. With multiple countries, including the U.S. and Israel, urgently looking for affordable ways of counteracting drones and missiles, the company’s very cheap lasers should be very popular. In past articles, I’ve noted that airborne lasers are also more resilient to adverse weather than ground-based lasers.
Machlis added that the company has also developed sensors, radar, AI, jammers and “kinetic siolutions” that counter the drone threat.
Excellent Q1 Results
Last quarter, Elbit’s revenue jumped 15.5% versus the same period a year earlier to $2.19 billion, while its operating income, excluding certain items, jumped to $222 million, versus $165 million in Q1 of 2025. Finally, as of the end of last quarter, its backlog surged over $7 billion compared with the end of Q1 of 2025 to $30.2 billion.
Valuation and the Bottom Line on ESLT Stock
The shares are changing hands at a very low forward price-earnings ratio of 9.66 times. Given the company’s rapid growth and powerful, positive catalysts, its valuation is extremely attractive.
This article is intended to be informational only; it is not financial advice.
