Elbit Systems Ltd. — Blitz Index 55 (C)
Elbit Systems scores 55 — a mature defence contractor growing like a growth company, with a record $32.0B backlog, held back by thin hardware margins and a moat built on contracts, not platforms.
Last re-scored: August 11, 2026.
Confidence: High · Category: frontier
Score breakdown
| Section | Score | Detail |
|---|---|---|
| A · Speed | 19 / 25 | Revenue +14.4% → +16.2% over FY2024–FY2025 and +15.9% in Q2 2026, with a record backlog of $32.0B — an accelerating trajectory unusual for a mature defence company |
| B · Moat | 31 / 60 | Systems integration and switching costs (B1 7) plus government distribution (B2 8) and a huge market (B3 11) — but a 25.3% gross margin caps the moat (B4 5) |
| C · Creative destruction | 11 / 15 | Precision systems, ISTAR and unmanned platforms displacing legacy arsenals as defence spending rises for a tenth straight year — a geopolitical tailwind, not a technology displacement the company owns |
| D · BlitzFailing | −6 | Clean balance sheet with ~$598M of net cash (D1 0); government-customer concentration and Israel exposure (D2 −2); Federmann family voting control (D3 −1); export-control and war-related reputational risk (D4 −3) |
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Radar axes (0–100): Moat 51.7 · Speed 76.0 · Creative 73.3.
Watch item
Gates: G1 ✓ (confirmed — growth sustained: three straight years of double-digit growth plus a second curve in European rearmament, US border and Asian ISTAR) · G2 ✓ (estimated — world military spending of $2,718B in 2024, up a tenth straight year). 10 points below the 65-point threshold — first score. No FLAG: deductions of only 6. Watch: whether the $32.0B backlog converts at better than a 25% gross margin, and whether export controls or the Israel exposure reprices the order book.
Strengths
- Three straight years of double-digit growth: FY2024 +14.4% → FY2025 +16.2% → Q2 2026 +15.9%, LTM +14%
- Record backlog of $32.0B (3.7× TTM revenue), 73% outside Israel — led by Europe
- Net cash of ~$598M, six-month operating cash flow of $517.8M (+70%), FY2025 free cash flow of $598M, and a dividend being paid
- Margins improving: gross margin 25.3% (from 24.0%), operating margin 9.6% (from 8.0%), GAAP operating profit +39% YoY
- Second growth curve showing in orders: European rearmament, the US border, Asian ISTAR
Concerns
- Margins are structurally thin: a mid-20s gross margin and a single-digit operating margin are the hardware mix's ceiling
- Government-customer concentration: long-contract recognition plus Israel exposure (27% of the backlog is domestic)
- Controlling-shareholder voting concentration (Federmann family) — exact stake unconfirmed
- Export-control and war-related reputational risk (D4 −3): an Israeli defence company under international scrutiny
- The defence market rides the geopolitical cycle — today's tailwind can turn into tomorrow's headwind
Research notes
Thesis: a mature contractor growing like a growth company
Elbit Systems enters the BlitzLab record with a first scoring of 55 out of 100, grade C, built from Speed 19 out of 25, Moat 31 out of 60, Creative Destruction 11 out of 15, and deductions of 6. The total sits 10 points below the 65-point line, and the shape of the score is the story: speed converts to 76.0 and creative destruction to 73.3, while the moat converts to only 51.7. This is a defence contractor — trailing-twelve-month revenue of about $8.62 billion — that has grown double digits for three straight years, holds a record backlog of $32.0 billion worth 3.7 years of revenue, and carries roughly $598 million of net cash while paying a dividend. The constraint is not demand but margin: a 25.3% gross margin and a 9.6% operating margin are the hardware mix's ceiling, and the moat is built on contracts and switching costs rather than a platform whose value rises with each user.
The gates: both pass — growth sustained, market ample
Gate 1, sustained growth or a second growth curve for a mature company, passes on a confirmed basis. Revenue grew 14.4% in fiscal 2024 and 16.2% in fiscal 2025, the second quarter of 2026 grew 15.9%, and the second curve — European rearmament, the US border, Asian ISTAR — is already visible in orders. Gate 2, a ten-year market ceiling at least ten times current revenue, passes as an estimate: world military spending reached $2,718 billion in 2024 by SIPRI's count, rising for a tenth consecutive year, against a bar of about $86 billion. The fourth quarter of 2026 has not been reported at T, and its reporting date is unconfirmed — it is not a company-confirmed date and must not be presented as one — and no outcome is anticipated here. That is the balance of the record at T: acceleration that is real, a balance sheet that is clean, and a moat whose ceiling is set by thin hardware margins and a geopolitical cycle the company does not control.
The business: mission systems for a rearming world
Elbit Systems sells mission systems and defence electronics — command, control, communications, computers, intelligence, surveillance and reconnaissance, electronic warfare, electro-optics, land systems, ammunition and unmanned systems — to governments rather than consumers. Revenue ran from $5.97 billion in fiscal 2023 to $6.83 billion in fiscal 2024, up 14.4%, to $7.94 billion in fiscal 2025, up 16.2%, with the second quarter of 2026 at $2,287.1 million, up 15.9% year on year. The order book is the story: a backlog of $32.0 billion at 30 June 2026, about 3.7 times trailing revenue, with 73% of it outside Israel Trailing revenue is about $8.62 billion.
Why it scored 55: demand is not the constraint — margin is
Speed scores 19 of 25. Growth (A1, 8 of 10) is three straight years of double digits — 14.4%, then 16.2%, then 15.9% in the quarter — with Land up 32% and ISTAR and electronic warfare up 22% in the quarter, and a backlog of $32.0 billion giving the growth visibility. Capital speed (A2, 4 of 5) is self-generated: operating cash flow of $517.8 million in six months, up 70% from $304.0 million, free cash flow of $598.4 million for fiscal 2025, and a dividend of $1.00 per share declared — growth and a dividend absorbed without an external raise. Hiring (A3, 3 of 5) is a snapshot: about 21,000 employees at 30 June 2026, trailing revenue per employee of about $410,000. Share speed (A4, 4 of 5) is the backlog in motion: a record $32.0 billion, growth led by Europe, 73% outside Israel — the pivot from domestic dependence to a global mission-systems integrator made visible.
The moat scores 31 of 60, and its ceiling is set by the margin item. Network effects (B1, 7 of 18) are system-integration and switching-cost effects: a mission system spanning air, land, sea and cyber, once adopted, stays for decades of maintenance and upgrades, and a growing installed base strengthens the interoperability, training and maintenance ecosystem around it. Distribution (B2, 8 of 18) is a global subsidiary network across the United States, Europe and Asia, long-term government contracts, and the $32.0 billion backlog as leverage, with the $370 million Customs and Border Protection order strengthening access to the largest defence market. Market size (B3, 11 of 12) is the strongest moat item: world military spending reached $2,718 billion in 2024 by SIPRI's count, up 9.4% year on year, the tenth consecutive annual increase; equipment procurement is about 25–30% of that, about $700 billion, and mission systems and electronics are about 20% or more of equipment. Gross margin (B4, 5 of 12) is the constraint: a gross margin of 25.3% in the quarter against 24.0% a year earlier and fiscal 2025 operating profit of $671 million, up 37% — the level is low and improving, far below the 65–74% gross margins of GH and CDNA.
Creative destruction scores 11 of 15, and the change is real but not Elbit's own. What is being displaced (C1, 4 of 5) is analog, platform-centric military power giving way to networked digital mission systems — C4ISR, ISTAR, unmanned systems, electronic warfare — a large and clear displacement, but one that the world's militaries are driving together, with Elbit as a participant rather than the driver. The behaviour change (C2, 4 of 5) is irreversible: once a military has converted to network-centric power there is no reason to return to analog systems, and European rearmament and border-surveillance demand are becoming structural, with the $32.0 billion backlog as the diffusion evidence. The cost-structure change (C3, 3 of 5) runs in the right direction — unmanned systems and sensor fusion lower the unit cost of surveillance — but there is no demonstrated collapse of Elbit's own cost structure.
The risks: six points of deductions — export controls are the largest
The deductions total 6, below the 15-point FLAG line, and the largest item is regulation. Debt (D1, 0) is a non-issue: cash and short-term investments of $962.9 million against borrowings of $364.5 million at 30 June 2026 give net cash of about $598 million, and the company is paying a dividend. Revenue quality (D2, minus 2) reflects the structure of government contracting: long-term government contracts recognised on a percentage-of-completion basis, and Israel exposure — 27% of the backlog is inside Israel — so government procurement cancellation and delay risk is structural. Governance (D3, minus 1) reflects the Federmann family as controlling shareholder; the exact voting share is unconfirmed, so the item is minus 1 only. Regulation (D4, minus 3) is the largest deduction: weapons export controls, war-related investigation and reputation risk, and the social cost of defence itself, including ESG exclusion.
What would change the score
Elbit Systems is ten points below the 65 line, and the path up runs through conversion and margin rather than demand. The $32.0 billion backlog, 3.7 years of revenue, has to convert into revenue at the pace the growth item assumes, and the margin trajectory has to continue: the gross margin improved 1.3 points to 25.3% and operating profit rose 37%, but the level is still the constraint. The risk runs the other way through export controls: a tightening of Israeli weapons export licences, or a turn in the European rearmament cycle that is carrying the backlog's growth, would slow conversion and widen the deductions on revenue quality and regulation together.
More Frontier companies
Other Frontier names on the Blitz Index, highest score first: Rocket Lab (62/B), Tesla (62/B), Illumina, Inc. (61/B).
Next earnings
Nov 17, 2026 · Before open · Confirmed
Coverage
Elbit Systems Ltd. · Next earnings unconfirmed at scoring · Score 55 · Grade C
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BlitzLab scores businesses against a scholar’s standard — not investment advice. No price targets, no buy/sell recommendations. Figures are from SEC filings (XBRL) as labeled in the source scorecard.