Independent equity research
Is BAE Systems (BA) a Buy, Hold or Sell?
BAE Systems — our independent, AI-built valuation and rating, in brief.
HOLD (reduce into strength)
12-mo fair value
1,870 p
To fair value
−1%
By · report dated 2026-08-21 · fair value derived independently of the market price.
The thesis, in brief
At 2,126p the market capitalises about GBP 3.9bn of steady-state owner free cash flow our base case does not reach until 2033: the 7.25% trailing yield is an artefact of GBP 1.6bn of H1-2026 customer advances, sustainable owner FCF is nearer GBP 2.6bn, and ROIC of 8.09% has fallen below an 8.4% cost of capital
How we value it
We value BAE Systems using Ten-year owner free-cash-flow DCF at an 8.4% WACC, scenario-weighted 20/50/30, blended 60/40 with a multiples centre.. The 12-month fair value is set from that intrinsic estimate first, then compared to the market to read the upside or downside — never anchored to the current price.
What the full report covers
- Business & moat + industry cycle
- Earnings quality & normalized EPS
- Returns on capital (ROIC vs WACC)
- Balance-sheet safety
- Two independent valuations (DCF + multiples)
- Bear / base / bull fair values
- Earnings-call analysis
- Insider activity & positioning
- Technicals (RSI / ADX)
- A falsifiable thesis
Read the full BAE Systems report
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