Strength Seen in Elbit (ESLT): Can Its 5.1% Jump Turn into More Strength?

Elbit Systems (ESLT) shares soared 5% in the last trading session to close at $701.38. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.8% loss over the past four weeks.

Shares of Elbit Systems rose following the announcement that its Swedish subsidiary plans to establish Europe’s first production and maintenance center for laser warning systems, expected to become operational in 2027. 

The initiative could strengthen Elbit’s position in European defense markets by enabling local production, faster deliveries and ongoing maintenance support for European and NATO customers. It may also improve the company’s competitiveness in future defense tenders. 

This maker of defense electronics is expected to post quarterly earnings of $3.86 per share in its upcoming report, which represents a year-over-year change of +15.2%. Revenues are expected to be $2.3 billion, up 19.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Elbit, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ESLT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Elbit is part of the Zacks Aerospace - Defense Equipment industry. TransDigm Group (TDG), another stock in the same industry, closed the last trading session 0.2% lower at $1109.77. TDG has returned 2.5% in the past month.

TransDigm's consensus EPS estimate for the upcoming report has changed +1.5% over the past month to $12.22. Compared to the company's year-ago EPS, this represents a change of +12.9%. TransDigm currently boasts a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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