BAE Systems Gains 26.9% in Past 3 Months: How to Play the Stock?

Shares of BAE Systems Plc BAESY have gained 26.9% in the past three months, outperforming the Zacks Aerospace – Defense Equipment industry’s growth of 23.6% as well as the broader Zacks Aerospace sector’s rise of 18.5%. It also outperformed the S&P 500’s growth of 9.5%.Image Source: Zacks Investment ResearchOther defense equipment stocks, such as Astronics Corporation ATRO and Curtiss-Wright Corporation CW, have also outperformed the industry in the past three months. Shares of ATRO have gained 36%, while shares of CW have gained 49.9%.With BAESY’s robust performance on the bourses, some investors may consider buying this stock right away. However, before taking any decision, it is important to understand the reasons behind this robust performance. Does the company have what it takes to continue the momentum, or are there risks that may affect its future growth? The idea is to help investors make a more insightful decision.What Caused BAESY’s Shares to Rise?BAESY’s robust performance on the bourses seems to have been influenced by its capacity expansion efforts and strategic collaborations.Notably, in June 2025, BAESY opened a cutting-edge shipbuilding facility, the Janet Harvey Hall, at its shipyard in Glasgow. Spanning 170 meters in length and 80 meters in width, the facility is large enough to assemble two Type 26 frigates side-by-side and is equipped with two 100-tonne and two 20-tonne cranes. The opening marks a major leap forward in shipbuilding efficiency and reinforces BAESY’s role as a prominent forerunner in naval innovation and capability.In the same month, BAE Systems opened a new submarine engineering hub in Coventry, marking a significant expansion of its defense operations. The state-of-the-art facility will focus on critical engineering work to support the UK's next-generation nuclear-powered attack submarines, known as the SSN-AUKUS program.Moreover, BAESY, alongside Leonardo and Japan Aircraft Industrial Enhancement Co. Ltd., launched a new joint venture company called Edgewing for the development and integration of the next-generation combat aircraft under its Global Combat Air Programme (GCAP), which aims to deliver a cutting-edge fighter jet by 2035. These strategic moves must have boosted investors’ confidence in this stock, which got duly reflected in the form of a share price hike.What Lies Ahead for BAESY Stock?BAE Systems is well-positioned to benefit from several favorable contracts and strategic moves that support its long-term growth. In June 2025, the company secured an approximate $259.1 million (£204.6 million) funding from the UK Ministry of Defence to develop and integrate advanced radar systems into the latest Royal Air Force’s Eurofighter Typhoon jets, strengthening its role in key defense programs.In the same month, BAE was awarded a $1.2 billion contract to design and build a next-generation missile warning and tracking satellite system for the U.S. Space Force.BAE Systems is also working closely with the U.S. Army to deliver significant upgrades to the battle-proven M109 Paladin platform, aligning with continued modernization efforts.Moreover, to expand its footprint in space technology, the company has recently partnered with South Korea's Hanwha Systems to jointly develop advanced multi-sensor satellite systems.Such initiatives should bolster BEASY’s operational results, particularly its top and bottom-line performances in the long run. In line with this, the Zacks Consensus Estimate for BAESY’s long-term (three-to-five-years) earnings growth rate is pegged at 13.4%.However, persistent global supply-chain pressures continue to pose a risk for aerospace-defense stocks like BAESY, ATRO and CW, which remain exposed to ongoing supply-chain disruptions due to factors such as labor and material shortages, as well as geopolitical tensions. In particular, developments in the U.S.-China relationship and the situation involving Taiwan can affect the global flow of essential raw materials and components. This, in turn, may affect production timelines and cost structures, potentially weighing on BAESY’s operational efficiency in the near future.Now let’s take a quick sneak peek at its near-term estimates to check what trend that reflects.BAESY’s Near-Term EstimatesThe Zacks Consensus Estimate for BAESY’s 2025 and 2026 revenues indicates a solid improvement of 62.6% and 7.4%, respectively, from the prior-year levels. The same for its earnings also indicate a double-digit year-over-year improvement.Image Source: Zacks Investment ResearchMoreover, the Zacks Consensus Estimate for BAESY’s 2025 and 2026 earnings per share has moved up considerably in the past 60 days, indicating analysts’ increasing confidence in the stock’s earnings-generating capabilities.Image Source: Zacks Investment ResearchBAESY Shares Trading at a DiscountBAESY stock is trading at a discount, with its forward 12-month Price/Earnings (P/E F12M) being 24.51X compared with its industry average of 49.32X.Image Source: Zacks Investment ResearchIts industry peers, ATRO and CW, are also trading at a discount. ATRO is trading at a P/E F12M of 20.11X, while CW is trading at a P/E F12M of 37.46X.ConclusionInvestors interested in BAESY may consider buying this stock, considering its discounted valuation, upward revision in earnings estimates, strong performance at the bourses and long-term growth prospects associated with its strategic expansions and collaborations.The stock currently sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Astronics Corporation (ATRO): Free Stock Analysis Report Bae Systems PLC (BAESY): Free Stock Analysis Report Curtiss-Wright Corporation (CW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks