# BAE Systems (BA.LSE)

Canonical: https://gigainvestors.com/s/BA.LSE

Analysis as of: 2026-10-16T07:33:46.650Z. Financial observations: FY1996–FY2025.

Listing currency: GBX. Reporting currency: GBP.

## Verdict

A wonderful business at too high a price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: GBX 1,933.50 per share; close as of 2026-10-15.

Estimated value: low GBX 851.06 per share, central GBX 950.55 per share, high GBX 1,082.99 per share. Buy at or below the central value GBX 950.55 per share. Valuation as of 2026-10-16T07:33:46.650Z; scenarios are not confidence intervals.

Expected annual return: 6.1% at the stated quote. About 6.1% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; GB 10-year bond 5.4% + 4 points).

## Checklist

### understandable: pass

- 2 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 0

- Operating margin variation: 0.08×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.08×

- FY2017: 0.09×

- FY2018: 0.09×

- FY2019: 0.09×

- FY2020: 0.09×

- FY2021: 0.10×

- FY2022: 0.10×

- FY2023: 0.11×

- FY2024: 0.10×

- FY2025: 0.09×

### moat: pass

- Years with nonpositive invested capital use equity plus debt and leases; positive earnings with no positive capital are shown above 100%.

- ROIC, median of available years: 15.0%

- ROIC, second-lowest year: 12.3%

- Typical minus recent gross margin: 0.8 pp

- Typical gross margin (annual median): 27.2%

- Recent gross margin (lower of latest and 3-year median): 26.4%

- Years with nonpositive capital: 6

- Capital spending / revenue: 2.5%

- ROIC including acquisitions, ten-year median: 12.8%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 10.8%

- FY2017: 13.9%

- FY2018: 13.1%

- FY2019: 16.1%

- FY2020: 13.1%

- FY2021: 12.3%

- FY2022: 59.6%

- FY2023: >100%

- FY2024: 47.0%

- FY2025: 49.8%

### economics: pass

- Owner earnings / net income, 5-yr: 0.89×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: GBP 8.2B

- Net income, five-year total: GBP 9.2B

- Return on incremental invested capital: >100%

- Working capital / revenue, annual change: -0.4 pp

- Working capital / revenue, change between three-year averages: -1.7 pp

- Working capital / revenue, final three-year average: 17.8%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 0.99×

- FY2022: 0.84×

- FY2023: 0.85×

- FY2024: 0.81×

- FY2025: 0.95×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 13.1% vs 49.8%

- Per-share earnings: 0.29 to 0.64 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.5%

- Ordinary dilution, 5-year annual growth: -1.1%

- Market cap gain: GBP 33B

- Cumulative retained earnings: GBP 9.0B

- Diluted shares, 10-year annual growth: -0.5%

- Diluted shares, 5-year annual growth: -1.1%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 10.6%

- Per-share value change: GBP 0.36

- Per-share value, starting three-year median: GBP 0.29

- Per-share value, ending three-year median: GBP 0.64

- Buybacks concentrated in cheaper years (correlation): 0.83

- Average buyback yield: 1.5%

- Buyback history: 6 years

- Debt-funded buybacks: No

- Acquisition spending: GBP 19B

- Cumulative net income, 10 years: GBP 15B

- ROIC, first three-year median: 13.1%

- ROIC, last three-year median: 49.8%

Chart: Earnings per share; fiscal year observations.

- FY2016: GBP 0.29

- FY2017: GBP 0.27

- FY2018: GBP 0.31

- FY2019: GBP 0.46

- FY2020: GBP 0.40

- FY2021: GBP 0.55

- FY2022: GBP 0.51

- FY2023: GBP 0.61

- FY2024: GBP 0.64

- FY2025: GBP 0.68

### accounting: pass

- Sloan accruals: -3.3%

- Receivables to sales index (DSRI): 1.17×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 5.3%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.60×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 1.29×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -1.4%

- FY2017: -4.5%

- FY2018: -0.8%

- FY2019: -0.5%

- FY2020: 0.5%

- FY2021: -2.5%

- FY2022: -4.0%

- FY2023: -5.9%

- FY2024: -5.2%

- FY2025: -3.3%

## Holders

## Price story

Price needs cash profits to grow 10.8% a year for ten years · sales +7.7%

Story as of 2026-10-16T09:59:57.700Z; price observation 2026-10-15.

Price needs cash profits to grow 10.8% a year for ten years

- 2025-11-12: BAE Systems Warns U.S. Government Shutdown Could Delay Payments ([finance.yahoo.com](https://finance.yahoo.com/news/bae-systems-warns-u-government-100000391.html))

- 2026-01-29: BAE Systems Wins Key US Contracts As Valuation Still Looks Modest ([finance.yahoo.com](https://finance.yahoo.com/news/bae-systems-wins-key-us-111132604.html))

- 2026-03-26: BAE Systems Deepens AI And Missile Defense Role With Long-Term US Deal ([finance.yahoo.com](https://finance.yahoo.com/sectors/technology/articles/bae-systems-deepens-ai-missile-180803706.html))

- 2026-07-16: BAE Systems secures 40Mk4 naval gun order from Brazil ([finance.yahoo.com](https://finance.yahoo.com/technology/articles/bae-systems-secures-40mk4-naval-130000814.html))

### Sales · FY2024–2025

sales +7.7%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-16.

- FY2016: GBP 18B 

- FY2017: GBP 17B 

- FY2018: GBP 17B 

- FY2019: GBP 18B 

- FY2020: GBP 19B 

- FY2021: GBP 20B 

- FY2022: GBP 21B 

- FY2023: GBP 23B 

- FY2024: GBP 26B 

- FY2025: GBP 28B 

### Gross margin · FY2025

gross margin 26.4%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-16.

- FY2016: 59.5% 

- FY2017: 64.7% 

- FY2018: 64.8% 

- FY2019: 26.5% 

- FY2020: 26.7% 

- FY2021: 26.6% 

- FY2022: 27.8% 

- FY2023: 65.4% 

- FY2024: 26.2% 

- FY2025: 26.4% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in aerospace & defense; annual sales are GBP 28.3 billion.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2025: revenue 28336000000; grossProfit 7477000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); BA.LSE: BAE Systems plc provides defense, aerospace, and security solutions in the United States, the United Kingdom, the Middle East, Australia, Kingdom of Saudi Arabia, Europe, and internationally. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence. The Electronic Systems segment offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial avionics, and precision guided solutions and communications systems, as well as space electronics, spacecraft, and ground and tactical systems. The Platforms & Services segment manufactures and sells combat vehicles, weapons, and munitions; and offers naval ship repair services, as well as operates and manages two government-owned and contractor-operated ammunition plants. The Air segment develops future combat air systems and falconworks alongside edgewing, and eurofighter and MBDA. The Maritime segment provides maritime and land services, including submarine, ship build, and support programs. The Cyber & Intelligence segment offers cyber security services for national security, central government, and government enterprises. The company was formerly known as British Aerospace plc and changed its name to BAE Systems plc in May 2000. BAE Systems plc was incorporated in 1979 and is headquartered in London, the United Kingdom.

### Why customers stay

Margins ranged from 26.2% to 65.4% during 2023–25; it earns 15% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2023: grossProfit / revenue = 65.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2024: grossProfit / revenue = 26.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2025: grossProfit / revenue = 26.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); 10-year return on capital observations [[2016,0.10835611132144428],[2017,0.13921544213834114],[2018,0.13090077574960912],[2019,0.16130123304894697],[2020,0.13063588507914575],[2021,0.12270050913535999],[2022,0.5963514437090734],[2023,1.3645119530085525],[2024,0.47039445053029283],[2025,0.4984442345586085]]; median 0.15025833759364404. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back GBP 502 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2016: growth capex 63000000; upkeep 345000000; owner earnings 913000000. Growth capex / owner earnings = 0.06900328587075576.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2017: growth capex 0; upkeep 389000000; owner earnings 807000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2018: growth capex 0; upkeep 358000000; owner earnings 987000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2019: growth capex 0; upkeep 470000000; owner earnings 1339200000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2020: growth capex 0; upkeep 477000000; owner earnings 1241800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2021: growth capex 0; upkeep 462000000; owner earnings 1738000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2022: growth capex 0; upkeep 693000000; owner earnings 1338800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2023: growth capex 175000000; upkeep 782000000; owner earnings 1573000000. Growth capex / owner earnings = 0.11125238397965671.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2024: growth capex 78000000; upkeep 1085000000; owner earnings 1587800000. Growth capex / owner earnings = 0.04912457488348659.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2025: growth capex 0; upkeep 920000000; owner earnings 1948800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); Dividend observations: [[2016,670000000],[2017,684000000],[2018,703000000],[2019,724000000],[2020,746000000],[2021,777000000],[2022,802000000],[2023,857000000],[2024,937000000],[2025,1027000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); FY2025: cash repurchases 502000000 GBP.

### Are managers owners

Insiders own 0.4% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); BA.LSE SharesStats.PercentInsiders = 0.449 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 10.8% yearly over ten years; actual growth was 8.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:33:46.650Z); Ten-year compound average after fade. Initial solved rate 0.14260525390339762. Price 1933.5; FX 100; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 0.28913385826771654 → FY2025 0.6424086632869448. Closing-price date 2026-10-15.

## Monthly share-price history (GBX per share)

- 2016-10: GBX 542.50 per share

- 2016-11: GBX 600.50 per share

- 2016-12: GBX 591.50 per share

- 2017-01: GBX 582.00 per share

- 2017-02: GBX 630.00 per share

- 2017-03: GBX 642.50 per share

- 2017-04: GBX 627.00 per share

- 2017-05: GBX 665.50 per share

- 2017-06: GBX 633.50 per share

- 2017-07: GBX 601.50 per share

- 2017-08: GBX 607.50 per share

- 2017-09: GBX 631.50 per share

- 2017-10: GBX 593.50 per share

- 2017-11: GBX 552.00 per share

- 2017-12: GBX 573.00 per share

- 2018-01: GBX 594.00 per share

- 2018-02: GBX 579.40 per share

- 2018-03: GBX 581.40 per share

- 2018-04: GBX 611.00 per share

- 2018-05: GBX 639.40 per share

- 2018-06: GBX 646.80 per share

- 2018-07: GBX 653.20 per share

- 2018-08: GBX 606.00 per share

- 2018-09: GBX 629.80 per share

- 2018-10: GBX 525.80 per share

- 2018-11: GBX 491.30 per share

- 2018-12: GBX 459.20 per share

- 2019-01: GBX 511.80 per share

- 2019-02: GBX 466.00 per share

- 2019-03: GBX 482.40 per share

- 2019-04: GBX 494.00 per share

- 2019-05: GBX 452.40 per share

- 2019-06: GBX 495.40 per share

- 2019-07: GBX 548.60 per share

- 2019-08: GBX 545.60 per share

- 2019-09: GBX 570.00 per share

- 2019-10: GBX 576.20 per share

- 2019-11: GBX 573.40 per share

- 2019-12: GBX 564.80 per share

- 2020-01: GBX 631.40 per share

- 2020-02: GBX 608.40 per share

- 2020-03: GBX 521.80 per share

- 2020-04: GBX 508.40 per share

- 2020-05: GBX 496.20 per share

- 2020-06: GBX 483.40 per share

- 2020-07: GBX 490.20 per share

- 2020-08: GBX 519.60 per share

- 2020-09: GBX 482.00 per share

- 2020-10: GBX 397.00 per share

- 2020-11: GBX 504.00 per share

- 2020-12: GBX 488.80 per share

- 2021-01: GBX 462.10 per share

- 2021-02: GBX 483.90 per share

- 2021-03: GBX 505.00 per share

- 2021-04: GBX 506.20 per share

- 2021-05: GBX 526.60 per share

- 2021-06: GBX 522.00 per share

- 2021-07: GBX 576.00 per share

- 2021-08: GBX 568.40 per share

- 2021-09: GBX 565.20 per share

- 2021-10: GBX 551.80 per share

- 2021-11: GBX 548.20 per share

- 2021-12: GBX 549.80 per share

- 2022-01: GBX 577.20 per share

- 2022-02: GBX 719.60 per share

- 2022-03: GBX 717.40 per share

- 2022-04: GBX 740.00 per share

- 2022-05: GBX 756.00 per share

- 2022-06: GBX 830.20 per share

- 2022-07: GBX 770.00 per share

- 2022-08: GBX 776.20 per share

- 2022-09: GBX 789.80 per share

- 2022-10: GBX 814.40 per share

- 2022-11: GBX 822.60 per share

- 2022-12: GBX 856.00 per share

- 2023-01: GBX 856.80 per share

- 2023-02: GBX 898.00 per share

- 2023-03: GBX 982.60 per share

- 2023-04: GBX 1,014.00 per share

- 2023-05: GBX 928.20 per share

- 2023-06: GBX 927.00 per share

- 2023-07: GBX 931.40 per share

- 2023-08: GBX 1,007.50 per share

- 2023-09: GBX 997.80 per share

- 2023-10: GBX 1,104.00 per share

- 2023-11: GBX 1,050.00 per share

- 2023-12: GBX 1,110.50 per share

- 2024-01: GBX 1,177.00 per share

- 2024-02: GBX 1,242.00 per share

- 2024-03: GBX 1,349.50 per share

- 2024-04: GBX 1,333.00 per share

- 2024-05: GBX 1,392.00 per share

- 2024-06: GBX 1,320.00 per share

- 2024-07: GBX 1,297.00 per share

- 2024-08: GBX 1,363.00 per share

- 2024-09: GBX 1,237.50 per share

- 2024-10: GBX 1,250.00 per share

- 2024-11: GBX 1,227.00 per share

- 2024-12: GBX 1,148.50 per share

- 2025-01: GBX 1,224.00 per share

- 2025-02: GBX 1,406.50 per share

- 2025-03: GBX 1,559.50 per share

- 2025-04: GBX 1,734.50 per share

- 2025-05: GBX 1,901.50 per share

- 2025-06: GBX 1,886.50 per share

- 2025-07: GBX 1,804.00 per share

- 2025-08: GBX 1,757.50 per share

- 2025-09: GBX 2,059.00 per share

- 2025-10: GBX 1,871.00 per share

- 2025-11: GBX 1,650.50 per share

- 2025-12: GBX 1,714.00 per share

- 2026-01: GBX 1,974.00 per share

- 2026-02: GBX 2,112.00 per share

- 2026-03: GBX 2,200.00 per share

- 2026-04: GBX 2,042.50 per share

- 2026-05: GBX 2,023.00 per share

- 2026-06: GBX 1,844.00 per share

- 2026-07: GBX 2,094.00 per share

- 2026-08: GBX 2,044.00 per share

- 2026-09: GBX 1,957.50 per share

- 2026-10: GBX 1,860.00 per share

## Annual estimated value (GBX per share)

- FY2016: low GBX 410.13 per share, central GBX 456.04 per share, high GBX 517.14 per share

- FY2017: low GBX 393.88 per share, central GBX 435.53 per share, high GBX 490.96 per share

- FY2018: low GBX 407.53 per share, central GBX 450.86 per share, high GBX 508.55 per share

- FY2019: low GBX 416.68 per share, central GBX 463.69 per share, high GBX 526.27 per share

- FY2020: low GBX 464.90 per share, central GBX 517.96 per share, high GBX 588.60 per share

- FY2021: low GBX 514.47 per share, central GBX 573.68 per share, high GBX 652.51 per share

- FY2022: low GBX 568.90 per share, central GBX 634.49 per share, high GBX 721.79 per share

- FY2023: low GBX 679.40 per share, central GBX 756.67 per share, high GBX 859.54 per share

- FY2024: low GBX 700.46 per share, central GBX 784.15 per share, high GBX 895.57 per share

- FY2025: low GBX 796.58 per share, central GBX 892.53 per share, high GBX 1,020.25 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.

## Reported holder observations