ELBIT SYSTEMS LTD (ESLT): what the price requires

At today's price, ELBIT SYSTEMS LTD (ESLT) is priced for today's economics sustained for ~7.1 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ESLT

Headline

FieldValue
TickerESLT
CompanyELBIT SYSTEMS LTD
Current price$735.83/sh
CompositionAerospace 23% / C4I and Cyber 11% / ISTAR and EW 17% / Land 28% / ESA 21%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed5.1%
Operating margin today8.5%
Margin compression implied-3.4pp
Must persist for7.1y
Multiple paid51x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.2 years.

Reconcile: at the x-ray's 9.3% required return this reads ~10 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
vs own history+1.02σ
cohort percentile (of 225 peers)92
sustained it ~7.1 years at this level21%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset5.09x5expensive
Earnings5.98x5expensive
Relative2.17x5expensive
Growth1.11x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.4%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$286.822.57xyesFCF base $0.6B, growth 11% (input: historical growth), terminal g 4.0%, WACC 9.4%, 6yr projection
DCF Exit MultipleGrowth$714.961.03xyesExit EV/EBITDA: 39.0x / 41.0x / 43.0x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$417.531.76xyesP/E 34.78x (blended: static sector reference 22x + trailing (TTM) 65x), scenarios: 28.8x / 34.8x / 40.8x (bear / base = reference held flat / bull), EV/EBITDA 22.1x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$123.125.98xyesBV/sh $88.02, ROE (TTM) 12.9%, ke 9.3%
Two-Stage Excess ReturnAsset$144.435.09xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$660.651.11xyesRev $7.9B, growth 11% (input: historical growth; tapered), Terminal P/S: 3.6x / 4.3x / 5.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$242.803.03xyesEPS $11.39, growth 21% (input: historical EPS growth), PEG=3.03 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$82.068.97xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.46B × (1−21%) / WACC 9.4% → EPV (no growth)
Residual IncomeAsset$148.944.94xyesBV $88.02 + 5yr PV of (ROE (TTM) 12.9% − Kₑ 9.3%) × BV; BV grows 8.4%/yr
Graham NumberAsset$150.194.90xyes√(22.5 × EPS $11.39 × BVPS $88.02) — Graham's conservative floor
EV/EBITDA RelativeRelative$250.622.94xyesEBITDA $0.84B × sector EV/EBITDA 14.0x
FCF YieldEarnings$126.495.82xyesFCF $552.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$120.416.11xyesSBC-adj FCF $0.53B (FCF $0.55B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$367.522.00xyesEPS $11.39 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$119.066.18xyesBV $88.02 × (ROIC 12.7% / WACC 9.4%)
P/Sales SectorRelative$338.402.17xyesRevenue $7.94B × sector P/S 2.0x
PEG Fair ValueRelative$364.202.02xyesEPS $11.39 × (PEG 1.5 × growth 21.3% (input: historical EPS growth)) → PE 32.0x
Earnings YieldEarnings$123.145.98xyesEPS $11.39 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$412.4m
Net debt / NOPAT (after-tax)-0.78x (net cash)
Net debt / operating income (pre-tax)-0.61x (net cash)
Interest coverage4.6x
Share count CAGR (dilution)1.5%
Burning cashno

Bullet Takeaways

Bull Case

What the market is paying for is visible, and for once the fundamentals are running to meet it. Revenue rose 15.5% to $2.189 billion in the first quarter of 2026, GAAP diluted EPS jumped 42% to $3.34, and operating margin expanded to about 10.1%. The market is pricing Elbit for years of double-digit growth and margin expansion, and the most recent quarter delivered both at once. That is the rare case where a demanding valuation gets fresh evidence the same week.

The order book is the spine of the bull case because it converts a defense-spending headline into contracted revenue. Backlog reached a record $30.2 billion as of March 31, 2026, more than $7 billion higher than a year earlier, and contract awards in the quarter alone topped $4 billion, including a roughly $1.4 billion European modernization contract. Backlog of that size against trailing-twelve-month revenue means several years of visibility, and a book-to-bill comfortably above one means the runway is still lengthening. The growth is broad, led by Land, command-and-cyber, and electronic warfare, not dependent on a single program.

The geographic shift is what changes the quality of the story. Roughly 71% of the backlog now originates outside Israel, with Europe described by management as the key growth engine. A defense supplier that was once read mainly as a play on Israeli procurement is increasingly a beneficiary of a continent-wide European rearmament, which diversifies the demand base and lengthens the cycle. The balance sheet can fund the scale-up: Elbit carries a modest net cash position, so the capacity expansion and R&D investment behind the growth are self-financed rather than borrowed. A buyer at today's price is paying a premium, but for a company whose orders, margins, and geographic diversification are all moving the right way.

Bear Case

The variable with the most leverage over this thesis is not a competitor or a balance-sheet item; it is geopolitics, and it cuts both ways. Elbit's demand has surged because of elevated global defense spending and regional conflict, and the same dynamic that built a record backlog can reverse it. The bear's concrete worry is de-escalation: a meaningful easing of the conflicts driving procurement, or a tightening of defense budgets in the European markets now generating the bulk of new orders, would slow the order flow that the entire valuation rests on. The price embeds the current wartime demand environment continuing for the better part of a decade, and demand of that kind is, by nature, cyclical and policy-dependent.

The valuation leaves no cushion for that risk. At roughly 59 times company-wide operating income, the price requires Elbit to hold operating growth near its self-funding ceiling for about nine years, a pace well above what the company has historically delivered, and one that only about 16% of comparable fast-growers have ever sustained for that long. The market has effectively priced the stock for flawless execution of a multi-year growth plan with little margin for error. The average analyst one-year target sits near $508, roughly 19% below today's $850, and several analysts describe the valuation as stretched and the rating as Hold, with upside capped by valuation risk.

The model disagreement makes the point sharpest. Among the valuation lenses, only the forward-growth method reaches the current price; the asset-value, earnings-power, and peer-multiple lenses all read the stock as richly valued, sitting far below today's quote. When the price rests on a single family that credits a long runway of compounding and every static method falls short, the support is entirely conditional on that compounding actually arriving. Operating margin near 10% is healthy for a defense prime but not extraordinary, and the price is paying as if it will both rise further and persist. If procurement slows, supply chains tighten, or one large program slips, the lenses that already fall short become the level the price reverts toward.

Valuation

Begin with the bet the price embeds, because it is unusually demanding. At about 59 times company-wide operating income, the $850.19 quote requires Elbit to hold operating growth near its self-funding ceiling for roughly nine years. That pace runs well above the company's own history, and only about one in six comparable fast-growers has sustained growth at that level for that duration. This is a high-conviction premium on a continued defense up-cycle, not a value entry.

The methods disagree about as sharply as they can. Only the forward-growth lens reaches the price; the asset-value, earnings-power, and peer-multiple lenses all read the stock as richly valued and sit well below today's quote. That single-family support is the signature of a durability premium, a bet on long compounding that the static frames structurally cannot price. The evidence the bull offers for that durability is concrete and large: a record $30.2 billion backlog, up more than $7 billion year over year, with roughly 71% generated outside Israel. The question the valuation poses is not whether the backlog exists but whether it keeps growing at the rate the price assumes.

Solvency is not where the risk lives. Elbit carries a modest net cash position and covers interest several times over, so it can fund capacity expansion and R&D internally; the balance sheet supports the growth rather than constraining it. The risk is entirely in the demand cycle and the execution. The most decisive fact for a buyer is the gap between the lenses: the assets, the trailing earnings power, and the peer multiples all say the price is rich, and only the assumption of a long, uninterrupted growth runway closes that gap. The analyst community's average target near $508 is a market consensus that the runway is real but the price has run ahead of it.

Catalysts

The first-quarter print was the recent catalyst and it was strong across the board. Revenue rose 15.5% to $2.189 billion, GAAP diluted EPS climbed 42% to $3.34, and operating margin expanded to about 10.1%, beating expectations and sending the stock higher. More important than the quarter itself was the order data: contract awards topped $4 billion, lifting backlog to a record $30.2 billion, up more than $7 billion from a year earlier.

The forward catalyst set is geographic and program-driven. Management called Europe the key growth engine and announced a roughly $1.4 billion European modernization contract in the quarter, the kind of large, multi-year award that anchors revenue visibility. With about 71% of backlog now originating outside Israel, the pace of European and other international defense procurement is the demand signal that matters most for whether the growth the price assumes continues. Growth is being led by Land, command-and-cyber, and electronic warfare, with AI capabilities cited as a strategic investment area.

Analyst positioning is the counterweight. Despite the strong quarter, sentiment is mixed, with a Hold consensus and an average one-year target near $508, well below the current price, on the view that the valuation already reflects the defense boom and the record backlog. The watch items are backlog conversion into recognized revenue, continued margin expansion from the current 10% level, and any shift in the geopolitical demand environment, since each contract award and each margin point is now measured against an unusually high bar.

Peer Cohorts (Per Segment, With Filing Citations)

Aerospace (reported)

ISTAR and EW (reported)

ESA (reported)

Series B / Series C / Series D (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings release · Q1 2026 earnings materials · Q1 2026 earnings call · analyst notes, 2026

View the full interactive ESLT report on boothcheck