Key Takeaways
- BAE Systems’ order book continues to expand, strengthening long-term revenue visibility across its defense programs.
- The FTSE 100 contractor increased its dividend 10% to 36p.
- With the share price at an all-time high, valuation remains sensitive to UK government defense spending.
Ollie Smith: With global conflict ever present and governments pledging to spend yet more on defense, BAE Systems BA. is already one of the FTSE 100’s top-performing stocks in 2026. Indeed, it’s just delivered a strong set of results for 2025.
Revenue is up 8% year-on-year. Operating profits are up 9%. BAE’s order book is £2.7 billion larger than 2024 and, for income seekers, dividend per share is up 10% to 36p. On the FTSE 100, BAE Systems is playing its part in the index’s fresh record highs, with this key defense and aerospace stock rising 23% in the year to date, positioning it for its best annual gain since last year, when it climbed 49%. BAE shares are up 56% on this time last year.
So what’s handing this multi-national arms manufacturer momentum right now?
What’s Driving the BAE Systems Share Price Rally?
BAE Systems has a portfolio of defense capabilities ranging from aircraft, weapons, munitions, and ships to submarines and cyber. The Royal Navy relies on BAE for its frigates. The British Army relies on BAE for small and large calibre munitions and Challenger 3 tank upgrades while, in the air, the RAF’s Typhoon fast jets were produced by BAE in partnership with other European nations.
As defense chiefs declare that the cost of peace is rising, so too is BAE’s stock, which has a market capitalization of nearly £61 billion. On Feb. 16, when UK prime minister Keir Starmer said he wanted to accelerate government efforts to reach defense spending of 3% of GDP by a few years earlier than planned, BAE stock rose another 2%. But it’s not just sentiment. BAE’s results are solid, and Morningstar equity analyst Loredana Muharremi says the company is securing sovereign capability status for what she calls a “multi-decade” European rearmament programme. But does that make BAE stock a buy?
Should I Buy BAE Systems Stock After Earnings?
At just over £21, BAE stock is trading at an all-time high. Morningstar’s take on its latest results is still pending, but Morningstar’s Muharremi highlights the likelihood that BAE’s order book will continue to expand as backlogs clear and orders turn to deliveries.
In the meantime, shares are still sensitive to an apparent political dispute over UK government defense spending, with reports suggesting Rachel Reeves’ Treasury is pushing back against Starmer’s rearmament rhetoric. There’s no doubt investors should focus on the facts as they stand. For now, however, the fact is BAE stock is performing brilliantly. For Morningstar, I’m Ollie Smith.
