Elbit Systems: First Look at Q2 Earnings

Research evidence excerpt

J P M O R G A N

North America Equity Research

11 August 2026

Elbit Systems

First Look at Q2 Earnings

Neutral

ESLT, ESLT US

Price (10 Aug 26):$846.04

Aerospace & Defense

Elbit continued its momentum of profitable growth in Q2, with both the top line and

earnings coming in ahead of our forecasts. Elbit’s backlog also once again

increased nicely to $32b in the quarter, and this represents 6% sequential growth.

In the release, mgmt highlighted how most of the backlog growth came in Europe,

and we’re expecting the order environment to be a focus of the call. Please see our

variance table below.

Seth M. Seifman, CFA AC

(1-212) 622-8140

Q2 sales were 4% ahead . . . The beat was driven by ESA, Land, and ISTAR

and EW, which came in 6-8% ahead of our forecast, while Aerospace missed

by 6%. In the release, mgmt pointed to higher sales for its Land High Power

Laser as a driver for the increase in ISTAR and EW sales, and we assume

investors will be keen for an update here. Separately, the Land segment

continues to execute quite well, growing 8% sequentially in Q2.

. . . with adj profit and margin strength. Elbit’s gross profit and EBIT beat

JPMe by 3% and 7%, respectively, with the non-GAAP EBIT margin 40 bps

ahead at 10.4%. This represents the second straight double-digit EBIT margin

quarter for Elbit, and we assume there is room for the company to continue to

expand margins.

Q2 FCF of $150m was about in line. This compares to our standing estimate

of $141m. A ~$230m increase in advances supported the cash generation. Elbit

also ended Q2 with > $950m of cash and short-term deposits and has plenty of

dry powder to deploy.