London, Feb 20, 2026, 08:38 GMT — Regular session
- BAE Systems came off early highs, with shares down 0.7% after notching a new 52-week peak at the open.
- Shares slipped after the company delivered strong full-year numbers, along with guidance pointing to more gains in 2026.
- Investors have their eyes on cash generation, along with how quickly new defence orders are coming in.
BAE Systems slipped 0.7% to 2,147 pence early Friday in London, pulling back from a new 52-week peak of 2,178 pence seen earlier. That price move put the company’s market value near 62.6 billion pounds, paring some of the gains built up through the week.
BAE, the UK’s top defence contractor, flagged a “new era of defence spending” as it posted a 12% jump in full-year operating profit and booked its biggest-ever order backlog. Operating profit came in at 3.32 billion pounds, with sales climbing 10% to 30.66 billion pounds. The company is guiding for sales to grow another 7% to 9% and operating profit to rise 9% to 11% in 2026. Reuters
This backlog—essentially, the pile of already-contracted work yet to be completed—offers investors one of the few clear sightlines in a market fixated on short-term outlooks. As a result, the shares trade on the assumption of flawless delivery, and there’s not much appetite for any unexpected hiccups.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, called BAE’s 2026 guidance “a touch conservative” after the group slightly beat profit forecasts. He pointed to ongoing supply-chain issues and production holdups as the big “trip hazards” for a company tied to lengthy contracts and demanding timelines. Hargreaves Lansdown
Combat-air production is drawing attention too. According to BAE’s chief executive, the Eurofighter Typhoon order book is full right up until the initial assembly phase of the UK-Italy-Japan Global Combat Air Programme, or GCAP—which is aiming for a 2035 in-service date, Defense News reported. On Eurofighter, BAE works alongside Airbus and Leonardo. Meanwhile, progress on the competing Franco-German-Spanish fighter has hit a snag due to an ongoing work-share dispute between Airbus and Dassault Aviation.
But defence projects rarely move in a tidy line. Deals might stretch on for years; margins and cash can take a hit from rising costs, delayed components, or shifting programme specs—even when order books appear strong.
Traders are watching to see just how fast the group can convert rising output into cash, particularly as it pours money into boosting capacity. Shipbuilding and electronics stand out: delivery schedules and customer prepayments can have a big impact on free cash flow.
BAE laid out its plans for shareholder returns, confirming the final dividend is scheduled for payment on June 4. Shares go ex-dividend April 23, with the record date following on April 24—pending shareholder sign-off. The company said it bought back 30 million shares in 2025, spending 502 million pounds.
