Reasons to Add BAE Systems (BAESY) to Your Portfolio Now
BAE Systems PLC BAESY is an advanced defense and aerospace systems company benefiting from the rising demand for defense products and a strong international presence. The company enjoys a stable financial position.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections
BAESY boasts a long-term (three-to five-years) earnings growth rate of 14.2%.
The Zacks Consensus Estimate for BAESY’s 2024 earnings per share (EPS) is pegged at $3.53, indicating growth of 30.3% from the 2023 projected figure.
The Zacks Consensus Estimate for 2024 sales is pegged at $34.03 billion, indicating growth of 29.4% from the 2023 estimated figure.
Debt Position
The total debt-to-capital of BAESY is 31.49%, better than 44.96% registered by the industry. This indicates that the company has less debt than its peers, which is a positive sign.
Strong Backlog and International Presence
The solid demand for BAE Systems’ products resulted in orders amounting to £21.1 billion for the half-year 2023, ending with a total backlog of £66.2 billion.
BAE Systems enjoys a strong geographic diversity with operations in the United States, the U.K, Europe, Japan, the Middle East and Australia. The United States accounted for 44% of its total sales, followed by the U.K. with 20%, during the first six months of 2023.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. BAESY’s current ROE is 15.2%, better than the industry’s average of 11.5%, which indicates that the company is using its funds more efficiently than its peers.
Price Performance
In the past year, shares of BAESY have rallied 49.9% compared with the industry’s average growth of 23.2%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same sector are AeroVironment Inc. AVAV, Hexcel Corp. HXL and Boeing Co. BA. Each stock carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for AVAV’s fiscal 2024 sales is pegged at $702.67 million, implying an improvement of 30% from the fiscal 2023 estimated figure. It delivered an average earnings surprise of 47.23% in the past four quarters.
HXL boasts a long-term earnings growth rate of 30.2%. The Zacks Consensus Estimate for 2024 sales is pegged at $1.99 billion, implying a year-over-year improvement of 10.5%.
BA boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for 2024 sales is pegged at $91 billion, implying a year-over-year improvement of 18.1%.
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