30% in weeks, the price of Bae Systems shares still offers value?

Since mid -February, the actions in the Defense Company BAE systems (LSE: BA) have jumped. In fact, in just seven weeks, the price of BAE shares has increased by 30%.

The company has niche capabilities and a solid order book at a time when defense spending in its main markets seems to increase significantly.

Taking the perspective of a long -term investor, so could they be worth considering that Bae Systems actions could even consider at the current price?

The assessment seems high

The company is currently quoted in a ratio to profits (p/e) of 24. That seems high, although it is part of a broader trend of great British defense contractors that see their valuations increasing significantly in recent times. Rolls-RoyceFor example, it is quoted in a P/E relationship of 22.

The price of BAE shares has tripled in the last three years. On the contrary, last year's income was 36% higher than in 2020 and net gain increased by 50% during that period. So, although both numbers are impressive, the growth of the price of the shares far exceeds.

That suggests that investors are considering future prospects for the business by deciding which are worth their shares.

But the defense is an industry full of excesses of costs, changes of summaries and unexpected delays. Therefore, trying to understand the future perspectives of a business like BAE can end up being a highly subjective activity.

Only one example makes the point: rates.

As new investigation of AJ Bell And Bloomberg shows that BAE has 59% of its facilities in the US, and that single market represents 46% of its sales. Therefore, changes in American tariffs could negatively affect BAE's profitability significantly.

2025 should be strong

Even allowing that, I hope the business works well this year.

Its current guide for 2025, assuming the same exchange rate as last year (in itself a risk), provides for the growth of sales of 7%-9%and the underlying profits per action of 8%-10%.

I think those numbers look absolutely solid, if they are achieved. However, they are far from being transformers.

Take into account the strong recent growth in the price of BAE shares, as well as the P/E relationship in the mid -twenties. For me, this type of valuation is more consistent with a company in very strong growth mode instead of one that seeks a high percentage growth of digits in key metrics such as the underlying profits per action, even when its industry suffers a boom in demand.

Meanwhile, Bae points out his “record order”

On the one hand, I see that as positive: orders flow. On the other hand, however, a portfolio too large can be a problem for defense contractors.

The longer the orders to meet, the happier customers can be, and that can be problematic not only in terms of future order flow, but sometimes it also results in financial sanctions.

I hope Bae has a strong 2025 and considers that I could continue in the coming years. But I think that the price of Bae's shares is already based on that expectation. For the part to move remarkably higher from here, I think it would receive stronger news about profits or orders.

I have no plans to invest.