Elbit Systems Ltd. (NASDAQ:ESLT) shares dropped 6.15% in pre-market trading on Tuesday even after the Israeli defence technology company reported second-quarter earnings and revenue above analyst expectations.
Adjusted earnings per share reached $4.14, beating the analyst consensus of $3.24 by $0.90. Revenue increased 16% year-on-year to $2.29 billion from $1.97 billion, also exceeding the $2.22 billion consensus estimate.
Elbit Systems backlog reaches record $32 billion
The company’s order backlog climbed to a record $32.0 billion, providing substantial visibility into future business activity.
Approximately 73% of the backlog relates to customers outside Israel, highlighting the international reach of Elbit Systems’ order book.
“The strong momentum in the second quarter was sustained, delivering double-digit growth in sales, backlog and earnings per share, improved profitability, and strong cash flow generation,” said Bezhalel Machlis, President and CEO.
Profitability improves alongside revenue growth
Elbit Systems also reported stronger margins during the quarter.
Adjusted gross profit increased to $586.5 million, equivalent to 25.6% of revenue, compared with $480.4 million and a 24.4% margin in the same period last year.
Adjusted operating income rose to $237.5 million from $175.1 million. The corresponding operating margin expanded to 10.4% from 8.9%, showing that profitability improved alongside the company’s double-digit sales growth.
Middle East conflict remains part of the investor backdrop
Despite the earnings beat, record backlog and margin expansion, Elbit Systems shares moved sharply lower before the opening bell.
The company’s operations continue to be affected by conflicts in the Middle East, including renewed hostilities between the U.S. and Iran in early July 2026 following the collapse of a memorandum of understanding.
The negative share-price reaction despite stronger financial results suggests investors are weighing factors beyond the headline earnings numbers, including the broader geopolitical environment surrounding the defence company.
Elbit Systems declares $1 dividend
Elbit Systems’ board also declared a dividend of $1.00 per share, scheduled for payment on October 26, 2026.
For investors, the quarter delivered several positive operating indicators: revenue increased 16%, adjusted earnings exceeded expectations, margins expanded and backlog reached a record $32 billion.
The 6% pre-market decline, however, shows that those results were not enough to support the stock immediately following the release, putting attention on geopolitical risks and how effectively Elbit converts its record order book into future revenue and earnings.
Elbit Systems stock price
