Why this new U.S. defense order matters for Gilat Satellite Networks (NasdaqGS:GILT)

Gilat Satellite Networks (NasdaqGS:GILT) just reported a new order of more than US$7 million for its Wavestream EnduroStream solid-state power amplifier solution, supporting the U.S. Department of War through a prime contractor.

The contract, scheduled for delivery over the next 24 months, marks an entry into a new defense market category for EnduroStream. The solution is designed to replace traditional traveling wave tube amplifiers in high power, mission critical gateway and terminal applications.

At a share price of US$18.48, Gilat Satellite Networks has logged a 6.1% 7 day share price return and an 18.7% 30 day share price return. Its 1 year total shareholder return of 183% suggests momentum has been strong over a longer stretch as investors react to contracts like this defense order and reassess the company’s risk and growth profile.

If this defense contract has you looking beyond a single name, it may be a good moment to scan for other communications and infrastructure plays in the AI ecosystem using our 37 AI infrastructure stocks

With the shares near US$18.48 and only about 3% below the consensus price target, the question is simple: Is Gilat still offering value after a 183% 1-year return, or is the market already pricing in future growth?

Most Popular Narrative: 3% Undervalued

At a last close of $18.48 versus a narrative fair value of $19.00, the current price sits slightly below what the most followed narrative assumes, which leans heavily on defense contracts and cloud based SATCOM progress.

Growing global investment in secure, mission-critical satellite connectivity, driven by increased geopolitical tensions, public infrastructure modernization, and digital inclusion initiatives, continues to expand Gilat's addressable market, as evidenced by record new defense contracts and major government programs in regions such as Latin America and Europe. This is likely to support outsized revenue growth and enhance long-term earnings visibility.

Curious what kind of revenue trajectory, margin profile, and future P/E multiple are baked into that $19.00 figure? The narrative leans on ambitious earnings compounding, a richer profitability mix, and a premium earnings multiple that still sits below a key industry benchmark. The full story spells out how these pieces fit together to justify that fair value.

Result: Fair Value of $19 (UNDERVALUED)

However, you still need to weigh execution risks related to Stellar Blu’s slower production ramp and the reliance on large, sometimes unpredictable government contracts in Peru.

Another View: High P/E Raises A Different Question

The narrative fair value of $19.00 frames Gilat as slightly undervalued, yet the current P/E of 67.5x is well above the US Communications industry at 37.2x, the peer average at 44.6x, and an estimated fair ratio of 40.9x, which suggests rich pricing and tighter room for error. This raises the question of which signal is more reliable right now.

Next Steps

With sentiment split between opportunity and caution, this is a good time to review the numbers yourself and then move quickly to shape your own view with our 1 key reward and 4 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.