Elbit’s order backlog grows with drone contracts
In the three months ended March 31, 2013, Elbit’s revenue fell 1.5%, to $680.2 million from $690.8 million a year earlier. However, earnings per share excluding one-time items rose 27.1%, to $1.22 from $0.96, on lower expenses and taxes. That beat the consensus estimate of $0.85. Elbit is Israel’s largest publicly traded defence company, but three-quarters of its business is overseas. North America accounted for 32% of its revenue in the latest quarter, with the Asia Pacific region at 19%, Europe at 18% and Latin America increasing to 10%. The company ended the quarter with an order backlog of $5.78 billion, up from $5.68 billion at the end of 2012. Elbit continues to win contracts in a big growth area: unmanned air vehicles, or drones. The stock trades at 11.2 times this year’s forecast earnings of $4 a share. It yields 2.7%. In the Inner Circle Q&A, Pat looks at Elbit’s outlook and examines whether rising defense budgets in Latin America and the Asia-Pacific region can offset declining defense spending in the U.S. and Europe. He concludes with his clear buy-hold-sell advice on the stock. (Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members The use of drones, particularly by the U.S. in Pakistan and Afghanistan, has been a source of a good deal of controversy in the past year. What is your view on investing in companies whose products generate controversy or protest from various groups? Let us know what you think.
