Gilat's Q4 2025 Earnings Show Steady Profitability Amidst Valuation Overhang

What happened

Gilat Satellite Networks reported fourth-quarter 2025 revenue of $137.0 million, GAAP operating income of $13.0 million, and adjusted EBITDA of $18.2 million, reflecting continued operational strength. This aligns with the DeepValue master report's findings of revenue growth from $240 million in 2022 to over $300 million in 2024, driven by strategic pivots to defense, commercial, and Peru segments. However, the report cautions that the stock has doubled in the past 12 months, trading at elevated multiples of ~31x EPS and ~16x EV/EBITDA, roughly double its DCF-based intrinsic value. Intense competition from NGSO constellations like Starlink and project risks in Peru persist as material threats to Gilat's moat and cash flow durability. Overall, the new results confirm improving fundamentals but do not mitigate the valuation concerns highlighted in the prior analysis.

Implication

The Q4 2025 results demonstrate Gilat's ability to sustain profitability and growth in its restructured segments, supporting the bullish aspects of its strategic narrative. However, with the stock trading at a significant premium to intrinsic value, there is minimal margin of safety, and any operational misstep or competitive setback could trigger a sharp correction. Persistent threats from NGSO constellations and terrestrial networks necessitate close monitoring of contract wins and technological adaptations, as outlined in the master report. Investors should wait for either a pullback toward more reasonable valuation levels or clearer evidence of durable high-growth economics before considering an entry. While the net cash balance sheet and recurring Peru revenue offer some downside protection, the overall risk-reward remains unfavorable at current prices.

Thesis delta

The Q4 earnings reinforce the existing 'WAIT' thesis by confirming operational improvement without addressing the core valuation overhang or competitive risks. No shift in investment stance is warranted; the focus remains on awaiting a better entry point or more durable growth signals. This update serves as a positive data point but does not alter the assessment that the stock is fully valued relative to its risk profile.