Why Elbit Systems Stock Soared 12% Higher This Week

Combat drone maker Elbit Systems (NASDAQ: ESLT) might not have been so pleased to head into the weekend. After all, according to data compiled by S&P Global Market Intelligence, the company's share price rose by almost 12% over the trading week. Investors were quite happy with the latest earnings release posted by the Israel-based defense specialist.

A pair of convincing beats

Well before the market open on Tuesday, Elbit unveiled both its fourth-quarter and full-year results. On the top line, it posted just over $1.93 billion in revenue, which bettered the $1.63 billion in the same period of 2023. It managed a more impressive leap in profitability, with non-GAAP (generally accepted accounting principles) adjusted net income surging 71% higher year over year to over $119 million ($2.66 per share).

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Both headline results were well above the consensus analyst estimates. On average, pundits following Elbit stock were anticipating the company would book only $1.75 billion in revenue and net an adjusted profit of $1.85 per share.

In the earnings release, Elbit didn't hesitate to mention that the quarter was its fourth in a row to notch a double-digit revenue increase.

It quoted CEO Butzi Machlis as saying, "The company has secured significant contracts worldwide, with its advanced technologies achieving major successes and milestones alongside investments in R&D and production infrastructure."

"Our global presence and diversified portfolio position us well to capture increasing global
defense budgets," he added.

A growing backlog

There's likely quite a bit more where that came from, as Elbit reported that its order backlog at the end of December was $22.6 billion, quite some distance above the end-2023 figure of $17.8 billion. It said that around 57% of the former amount was scheduled to be shipped this year and next.

Given the numerous conflicts around the world that are relying more on drone technology to save lives and money, Elbit should do just fine going forward. This company feels very much like it is in the right business at the right time in history.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.