Sample note. Numbers are illustrative placeholders, not live data.
Why defense is different
Revenue is contracted years in advance and the customer does not go bankrupt. That makes the backlog the single most important line to understand.
The conversion question
| Metric | Value |
|---|---|
| Backlog | $160B |
| Backlog / annual revenue | 2.3x |
| Operating margin | 10.9% |
| Free cash flow yield | 5.6% |
Where it goes wrong
Fixed-price development programs. When a program slips, the contractor eats the overrun. Watch the charges line every quarter.
Bottom line
Pay for visibility, but not for perfection. The multiple should leave room for the occasional program charge.
Educational content only. Not investment advice.