Geopolitical tensions around the escalating Iran war have heightened uncertainty across markets this year. With ceasefire talks in limbo, risk remains high, and defense spending continues to surge. Amid this highly tense environment, defense stocks are emerging as winners.
One such company is Israel-based defense giant Elbit Systems (ESLT). The stock has surged roughly 56% year-to-date (YTD) and has also outperformed the broader market, riding a wave of global military demand.
So, should you buy Elbit Systems stock now or wait?
About Elbit Systems
Valued at $40.9 billion by market capitalization, Elbit Systems is one of Israel’s largest defense contractors and a global supplier of advanced military technology. But the company isn't seeing demand just from Israel — it also sees exceptional demand on a global basis.
Unlike wars in the past, modern warfare relies on speed, data, and precision. To that end, Elbit Systems operates across multiple critical defense segments, such as unmanned aerial vehicles (UAVs), electronic warfare systems, surveillance technologies, command-and-control systems, and precision-guided weapons. These technologies represent the future of warfare.
A War-Driven Rally That’s Hard to Ignore
While ESLT stock's rally this year appears to be war-driven, it is also backed by strong and accelerating financial performance. In the fourth quarter, the company generated more than $2 billion in quarterly revenue for the first time. For the full year, revenue surged 16% year-over-year (YOY) to $7.9 billion and adjusted EPS jumped sharply by 46% to $12.75 per share. The company also generated free cash flow of $553 million in 2025.
Perhaps what stands out most from Q4 is the massive backlog of $28.1 billion. Investors should note that this backlog reflects future unrealized revenue, meaning that even if the war ends, demand for Elbit’s systems remains strong owing to rising defense spending in an increasingly unstable world. While the Iran war has been a key catalyst, Elbit’s growth story extends far beyond a single region. In fact, 72% of the company's backlog came from international customers.
Another factor that investors might find appealing is the company’s focus on next-generation technologies. Elbit Systems is investing heavily in advanced capabilities such as artificial intelligence (AI) driven defense systems, high-powered laser weapons, and integrated battlefield networks. These technologies represent a shift toward autonomous and highly intelligent warfare systems.
The Valuation Concern
As there are two sides to a coin, every high-powered growth stock carries some negatives. After its sharp rally, Elbit Systems is trading at a premium compared to its historical levels.
Currently, ESLT stock is valued at 66 times forward 2026 earnings, with earnings expected to increase by 22% to $13.93 per share in 2026. EPS is expected to further increase by 18% to $16.48 in 2027. This premium valuation assumes sustained geopolitical tensions will push Elbit to achieve this growth. Any slowdown in orders, easing of global conflicts, or operational hiccups could put pressure on the stock.
Is It Too Late to Buy Elbit Systems Stock?
Deciding whether or not to buy ESLT stock depends on individual investors’ risk appetite and investment horizon. The question isn’t whether Elbit will grow — it most likely will. In fact, Elbit Systems stock hasn’t skyrocketed this year just because of rising defense demand. The stock has returned 821% over the last decade. Now, with a massive backlog, expanding global demand, and strong technological capabilities, the company has all the ingredients for sustained long-term growth.
However, ESLT stock may face volatility in the short term as easing geopolitical tensions could trigger pullbacks. Long-term investors who understand that the company is deeply embedded in the future of warfare and can handle this volatility might just want to wait for a better entry point.
Analysts give Elbit Systems stock an overall “Hold" rating. Of the five analysts with coverage of the stock, two have a “Strong Buy” rating while three provide a “Hold" rating. Based on the mean target price of $1,038.75, ESLT stock has potential upside of 16% from current levels. The high price estimate of $1,115 implies that shares could climb 24% over the next 12 months.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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