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1. Company Snapshot

1.a. Company Description

Thales S.A. provides various solutions for civilian and military customers in the aeronautics, space, defense, security, ground transportation, and digital security markets worldwide.It operates through Aerospace, Transport, Defence & Security, and Digital Identity & Security segments.The company offers communications, command, and control systems; mission services and support; protection and mission/combat systems; surveillance, detection, and intelligence systems; training and simulation solutions for air, land, naval, and joint forces; and digital identity and security solutions.


It also provides air traffic management solutions; flight decks and avionics equipment and functions; in-flight entertainment and connectivity systems and services; electrical systems; aerospace training solutions; navigation solutions; support and services for avionics equipment; and vision systems.In addition, the company designs, operates, and delivers satellite-based systems for telecommunications, navigation, earth observation, environmental management, exploration, and science and orbital infrastructures; signaling, communications and supervision, and fare collection management systems and related services; cybersecurity and railway digitalization systems; and main line rail, and urban and intermodal mobility solutions.Further, it provides solutions for various markets and applications, including radiology, radio frequency, microwave sources, training and simulation solutions, lasers, and microelectronics solutions for science, industry, space, defense, automotive, railways, and energy conversion platforms.


Thales S.A. has a strategic agreement with Google LLC.The company was formerly known as Thomson-CSF and changed its name to Thales S.A. in 2000.Thales S.A. was founded in 1893 and is headquartered in Courbevoie, France.

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1.b. Last Insights on HO

Thales' recent performance was driven by robust financial growth, strategic partnerships, and a strong defense business. The company's adjusted operating earnings rose 14% on a like-for-like basis to $3.20 billion, driven by demand for air defense systems, avionics, and space activities. A proposed merger of satellite activities with Airbus and Leonardo is under review by European competition authorities. Additionally, the company's 2026 Data Threat Report highlights rising AI security risks, bringing Thales into focus. Its defense business is expected to continue growing, fueled by Europe's increasing military spending.

1.c. Company Highlights

2. Thales' 2025 Full Year Results: Strong Commercial Performance and Strategic Progress

Thales delivered a robust financial performance in 2025, with revenues growing organically by 8.8% to a record EUR 22.1 billion, driven by Defence and Aerospace activities. The adjusted EBIT margin stood at 12.4%, with adjusted EBIT rising by 13% to EUR 2.7 billion. Adjusted EPS was EUR 9.76, and actual EPS came out at EUR 5.32, slightly below estimates of EUR 5.46. Free operating cash flow reached a record high of EUR 2.6 billion, up 27% year-on-year.

Publication Date: Mar -04

📋 Highlights
  • Record Order Intake: EUR 25.3 billion in 2025 with a book-to-bill ratio of 1.14.
  • Organic Sales Growth: 8.8% to EUR 22.1 billion, driven by Defence and Aerospace segments.
  • Adjusted EBIT Rise: 13% increase to EUR 2.7 billion, with a margin of 12.4%.
  • Free Operating Cash Flow: EUR 2.6 billion, up 27%, achieving a 128% conversion ratio.
  • Strategic AI Investments: 800 AI experts, 200 AI patents, and Agentic AI integration in cyber solutions.

Segment-wise Performance

Aerospace saw a solid 8.7% organic sales growth, driven by Avionics and Space. Defence set a new record high in order intake, with a book-to-bill ratio above 1 for the seventh year in a row. Cyber & Digital sales were flat organically, impacted by a mixed performance, but adjusted EBIT margin resisted in the context of lower revenues. As Patrice Caine, CEO, emphasized, "AI is a key element of Thales' global competitiveness plan, used in various products, such as sensors, radars, and electronic warfare equipment, as well as in decision-making systems."

Outlook and Guidance

For 2026, Thales expects organic sales growth of 6-7%, corresponding to sales of EUR 23.3-23.6 billion. The company targets an adjusted EBIT margin of 12.6-12.8% and a free operating cash flow conversion ratio of 95-100%. Defence is expected to grow at a high single-digit rate, Aerospace at mid-single digit to mid-single digit plus, and Cyber & Digital at mid-single digit.

Valuation and Dividend

With a P/E Ratio of 75.33 and an EV/EBITDA of 21.77, Thales' valuation appears to be demanding. However, the company's dividend yield stands at 1.52%, and the proposed 5.5% increase in dividend to EUR 3.90 per share may attract income investors. The Free Cash Flow Yield is 4.95%, indicating a reasonable cash generation capability. Analysts estimate next year's revenue growth at 8.1%, which may support the current valuation.

Strategic Initiatives

Thales is focused on restoring growth in its cyber business, leveraging the integration of Imperva, and delivering commercial synergies. The company is investing in AI-driven productivity and scaling AI capabilities across its offerings. Thales' cyber business is expected to grow, driven by efficient solutions to fight against AI-powered cyber attacks. The company is also making progress in promoting gender diversity and reducing CO2 emissions.

3. NewsRoom

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Assessing Thales (ENXTPA:HO) Valuation After German Budget Jitters Hit Defence Stocks

Apr -15

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European Stocks Fall in Monday Trading After US-Iran Peace Talks Collapse

Apr -13

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Open Text Announces European Cloud Solutions Partnerships

Apr -13

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OpenText and S3NS Partner to Deliver European Sovereign Cloud Solutions with Google Cloud

Apr -13

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Airport Security Solutions Global Markets, 2025-2026 & 2030 with IDEMIA, SITA, Thales, NEC, Honeywell, Amadeus, HID Global, Teledyne FLIR, Smiths Detection, Genetec, and Milestone Dominating

Apr -10

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Richardson Electronics Q3 Earnings Call Highlights

Apr -09

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Thales (ENXTPA:HO) Valuation Check After Recent Share Price Softness And Defence Growth Prospects

Mar -29

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Global Embedded Hypervisor Market to Reach USD 89.56 Billion by 2035, Driven by Automotive, 5G & AI Adoption Across USA, Europe & Asia-Pacific - Key Players: Wind River, BlackBerry QNX, Siemens, Thales & Green Hills

Mar -27

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.10%)

6. Segments

Defence (Excluding of Digital I&S)

Expected Growth: 6.5%

The defence segment is likely to grow at a slightly lower rate than the global average due to budget constraints in some countries, but the overall demand for advanced military systems will drive growth. The 6.5% growth is a reasonable estimate considering the segment's stability and the ongoing modernization efforts.

Aerospace

Expected Growth: 8.0%

The aerospace segment is expected to grow faster than the global average due to the increasing demand for air travel and the need for advanced avionics systems. The growth in commercial aircraft deliveries and the modernization of military aircraft will drive this segment's growth.

Cyber & Digital

Expected Growth: 9.0%

The Cyber & Digital segment is expected to be one of the fastest-growing segments due to the increasing demand for cyber security and digital identity solutions. The ongoing digital transformation and the need for secure systems will drive this segment's growth.

Other

Expected Growth: 4.0%

The 'Other' segment is expected to grow at a lower rate due to its non-core nature and the potential for restructuring or divestment. The 4% growth is a conservative estimate, reflecting the segment's limited growth potential.

7. Detailed Products

Aerospace Solutions

Thales provides aerospace solutions for commercial and military aircraft, including avionics, navigation, and communication systems.

Transportation Systems

Thales offers transportation systems for rail, road, and sea, including signaling, train control, and passenger information systems.

Defence and Security Solutions

Thales provides defence and security solutions for governments and military forces, including communication, electronic warfare, and optronics systems.

Digital Identity and Security Solutions

Thales offers digital identity and security solutions for governments, enterprises, and individuals, including biometric authentication and cybersecurity systems.

Satellite Systems

Thales provides satellite systems for telecommunications, navigation, and Earth observation, including satellite design, manufacturing, and operation.

8. Thales S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Thales S.A. operates in a highly competitive industry, but its strong brand recognition and diversified product offerings mitigate the threat of substitutes.

Bargaining Power Of Customers

Thales S.A. has a diverse customer base, and no single customer has significant bargaining power, reducing the threat of customer bargaining power.

Bargaining Power Of Suppliers

Thales S.A. relies on a network of suppliers, but its large scale and diversified supply chain mitigate the bargaining power of individual suppliers.

Threat Of New Entrants

The aerospace and defense industry has high barriers to entry, including significant capital requirements and regulatory hurdles, reducing the threat of new entrants.

Intensity Of Rivalry

The aerospace and defense industry is highly competitive, with several established players competing for market share, driving the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 51.30%
Debt Cost 3.95%
Equity Weight 48.70%
Equity Cost 6.91%
WACC 5.39%
Leverage 105.32%

11. Quality Control: Thales S.A. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Safran

A-Score: 5.0/10

Value: 1.1

Growth: 4.1

Quality: 7.3

Yield: 0.6

Momentum: 8.5

Volatility: 8.3

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Thales

A-Score: 5.0/10

Value: 1.9

Growth: 5.0

Quality: 4.2

Yield: 3.1

Momentum: 10.0

Volatility: 5.7

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Airbus

A-Score: 5.0/10

Value: 1.9

Growth: 5.6

Quality: 5.2

Yield: 1.2

Momentum: 8.5

Volatility: 7.3

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BAE Systems

A-Score: 4.9/10

Value: 2.4

Growth: 6.8

Quality: 4.9

Yield: 5.0

Momentum: 4.5

Volatility: 6.0

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Rheinmetall

A-Score: 4.9/10

Value: 0.2

Growth: 8.6

Quality: 6.2

Yield: 2.5

Momentum: 10.0

Volatility: 2.0

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Rolls-Royce

A-Score: 4.8/10

Value: 1.9

Growth: 6.4

Quality: 6.6

Yield: 0.6

Momentum: 9.5

Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

269.2$

Current Price

269.2$

Potential

-0.00%

Expected Cash-Flows