Elbit Systems Ltd. (ADR) (ESLT)

2/68 in Aerospace & Defense -(74.5 @ B/A+)

great earnings. so great that even as they trade near an all time high - their dividend is *still* about 6%!!
ESLT is a diversified military supplier based in Israel. They're supplying standard military needs, but also on the cutting edge with UAV's - they're one of AVAV's biggest competitors in the small UAV space. Because of the very tight laws in America about selling to "friendlies", AVAV can't sell to many countries - or would have to jump through many hoops to do so. ESLT is rapidly expanding all over the world with recent wins from South America to Asia.

Value, growth, future tech.....where is the growth in military spending today and especially in the future? ESLT benefits from the war on terror as well ....FLIR is another one.

Held in mutual fund, real money.

1% of the IBD 100.

only stock I picked on my own research that has done well. israel will continue to spend in this area no matter what the circumstances with the 'peace' process. I like to invest in Israeli stocks and this one is my favorite.

#5 Stock in IBD Industry Group Ranking #6. 09/05/2008

In 2000 - sales of nearly $600M with a backlog of $1.44B, 2008 estimates of $2.6B in sales and a backlog of $5.5B with operating profit of double than that of 2007 (about $200M) - there is a trend here.
Having growing activity in all security sectors (land, air and sea), very good management team and with excellence in electro optics and electronic warfare - I see only growth here - and on the long run.

Three things to count on in my lifetime: death, taxes, and Israel will be at war. After the news on Friday of eminent war between Israel and Iran, I began an investigation into defense stocks that could stand to profit. Elbit Systems is my choice play right now due to the following conditions:

1. - First and foremost, statements by Israel hinting towards action tend to be preparatory, not just threatening. Elbit is the only publicly-traded Israeli defense company that I know of, as most Israeli defense companies are still state-owned (for security purposes) at this time.

2. - While the P/E seems high, and the PEG does not ease this discomfort, the ev/EBITDA is at a low 9.5ish, redeeming itself to a good valuation accounting for debt.

3. - Earnings estimates look positive, and they have continuously surprised analyst estimates for the past 4 quarters, by an increasing margin each consecutive quarter, and most recently by a giant leap up to a 34% surprise.

4. - Elbit sits on a mountain of cash, awaiting timely purchase of choice acquisitions, especially if Israeli government allows for the privatization of some defense companies.

5. - Elbit specializes in growth defense markets: unmanned vehicles and simulation software.

6. - 65% of revenues are collected in non-dollar denominations, providing a hedge against the declining value of the dollar.

7. - Inside ownership is a whopping 50%!

ESLT seems very well positioned going into earnings. As many other companies are beating estimates with in the defense realm, they have very little downside as they operate on contracts and overseas spending is increases. ESLT specializes in unmanned air vehicles, space technologies, surveillence and reconascence, electronic intelligence and military communication systems just to name a few.

With respect to 2007, ESLT's revenues increased by 30% from 2006. Net earnings in 2007 were $1.81 per share versus $1.72 in 2006 but this included a write down of $.58 per share with reference to the acquisition of Tadiran. Backlog at the end of last year was $4.62 billion which is 22% higher than 2006. Cash flow increased to $261 million from $201 million the year prior. These numbers were quite good and I expect the growth to continue.

The reason I believe they will fly through earnings has more to do with their holdings and the types of products these companies produce. The first is Tadiran which produces military communication systems. Cyclone Aviation Products produces aerostructure components. These types of companies have been doing well this earnings season and I would suspect as well here. Silver Arrow produces UAV systems. These systems have been in high demand. The reason for this is that militaries spend millions of dollars on pilot that can be killed in combat, by leaving the home and having them for missions where their plane is shot down is invaluable to militaries all over the world. Elbit Security Systems produces optical security systems that are in vogue since the 9/11 attacks. Elisra specializes in advanced defense solutions. These systems are always being upgraded to maintain security. Kinetics produces components for combat vehicles. Semi-Conductor Devices makes infrared detectors and laser diodes. Opgal Optronic Industries makes thermal imaging systems for commercial applications. All of these areas seem to be positioned well in this environment of terrorist and other difficulties. The military exposure should prevent downside in the stock.

On January 20th of 2008, they were awarded a contract for $40 million with respect to thermal imaging systems. On January 27th, they received another $40 million contract with the Royal Netherlands Army for the purchase of their advanced battlefield management system. On February 11th, the United States Marine Corp signed a contract for $26.5 million for lacer spot imagers. On March 5th, a $160 million contract was signed with SPR for purchase of parts. This one I found intrigueing as the majority of SPR's parts go to Boeing. The contract runs from 2009-2016 and was their largest ever for commercial aircraft parts. They also won a contract with the French Special Forces for UAV aircraft on March 25th. On April 9th they received an initial order of $3.8 million to provide HUD's for the new F-16 aircraft. This contract could be valued at much more as it depends on how well it goes. Lastly, on May 5th, they received a $127 million contract to provide communication solutions.

When checking Yahoo Finance the analyst has an estimated earnings growth of 24.4% for this quarter on 28.8% revenue growth. This year is 23% earnings growth on 16.8% revenue growth. The one thing with respect to this stock that I am bearish is the chart as it seems to have hit resistence and started a new trend. Support seems to be around $52 but I think there is upside to $60. Look for them to beat earninigs and raise guidence.

This stock along with the rest of the defense sector is heading higher. Say hello to investors and money managers looking to survive a recession this summer by jumping into defense. Learn to follow the crowd (mutual funds and such)--it consistantly weathers better than navigating against the grain.

Defense electronics, is a innovative field, with high demand and especially in an unstable part of the world.
I would reckon that this will farewell over the next 5 years

this stock has been on a gradula increase over the last few month's. it is time for the trend to change.

Came up as my recommended stock. While I don't think it's a Lockheed, FLIR, or Ceradyne, I think this company has some potential. Defense is a fickle business where size matters and it only takes the loss of 1 big contract to put a smaller company out. They seem to have a good product and service line so making it is where the management comes in. I'd have to look further into before buying.

Elbit, or ESLT, is one of the most growing companies in Israel these days. in a few days Elbit will report their backlog which is 4.5B dollar. only a half of it is destinated to 2008 - the rest is mostly for 2009-2010. that means that Elbit has 2 years and a 1/4 of promised incomes. moreover, this income of 4.5B does not incule another 2.5B of sellings to the US army that needs to be confirmed by the pentagon.

i also read that the CAGR of ESLT should be 10% (growing pase per year), and the main banks and investment companies here in Israel say that Elbit will become a leading compay in the world market.

top small defence/aerospace scompany out of Israel

Sell this when it hits positive 5.

Posted positive Earnings surprise recently. Good earning history.

Righteous Rocket