Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, BAE Systems's Probability of Financial Distress (%) is 0.03%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
BAE Systems (XTER:BSP) Probability of Financial Distress (%) Explanation
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
BAE Systems Probability of Financial Distress (%) Related Terms
XTER:BSP vs GE, RTX, BA: Probability of Financial Distress (%) Comparison
For the Aerospace & Defense subindustry, BAE Systems's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
BAE Systems Probability of Financial Distress (%) vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, BAE Systems's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where BAE Systems's Probability of Financial Distress (%) falls into.
BAE Systems Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
LPFD
=
-20.12 * NIMTAAVG
+
1.60 * TLMTA
-
7.88 * EXRETAVG
+
1.55 * SIGMA
-
0.005 * RSIZE
-
2.27 * CASHMTA
+
0.070 * MB
-
0.09 * PRICE
-
8.87
=
-8.24
The Probability of Financial Distress (%) (PFD) was then obtianed by:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
What does a Probability of Financial Distress (%) of 0.03% mean?
BAE Systems (XTER:BSP) has a Probability of Financial Distress (%) of 0.03% as of Jun. 24, 2026.
Is BAE Systems' Probability of Financial Distress (%) too high?
BAE Systems' current Probability of Financial Distress (%) is 0.03%. Overall, BAE Systems has a GF Score™ of 86/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does BAE Systems' Probability of Financial Distress (%) compare to GE and RTX?
BAE Systems' Probability of Financial Distress (%) of 0.03% can be compared against companies in the Aerospace & Defense industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Probability of Financial Distress (%) for an Aerospace & Defense company?
A good Probability of Financial Distress (%) depends on the Aerospace & Defense industry context. However, Probability of Financial Distress (%) should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Probability of Financial Distress (%) mean?
A high Probability of Financial Distress (%) can signal that a stock is expensive relative to its fundamentals. BAE Systems's current Probability of Financial Distress (%) is 0.03%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is BAE Systems stock overvalued right now?
Based on GuruFocus' analysis, BAE Systems (XTER:BSP) is currently considered Fairly Valued. The stock's GF Value™ is €19.49, compared to a current price of €21.17 — trading 8.6% above its estimated fair value. The current Probability of Financial Distress (%) is 0.03%. BAE Systems' overall GF Score™ is 86/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Probability of Financial Distress (%) calculated?
Probability of Financial Distress (%) is calculated from a company's financial statements. For BAE Systems (XTER:BSP), the current Probability of Financial Distress (%) is 0.03% as of Jun. 24, 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is BAE Systems (XTER:BSP) Overvalued in 2026?
Based on GuruFocus' analysis, BAE Systems stock appears to be overvalued.
The current stock price of €21.17 is trading 8.6% above its estimated GF Value™ of €19.49.
GuruFocus considers BAE Systems to be Fairly Valued.
Key valuation signals for XTER:BSP:
Probability of Financial Distress (%): 0.03%
GF Value™: €19.49 vs. price of €21.17 (8.6% above fair value)
No single metric tells the full story. See the XTER:BSP stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
BAE Systems is a British global defense, security, and aerospace company and the largest defense contractor in Europe; it is one of six prime contractors to the US Department of Defense. For reporting purposes, the company has five operating segments: electronics systems is the group's US- and UK-based electronic warfare systems; the cyber, security, and intelligence segment supplies intelligence and security solutions to the US government; platforms and services manufactures combat vehicles and munitions and performs ship repair services to the US Defense Department; the air segment includes BAE's share of US and European air programs as well as its businesses in Saudi Arabia and Australia, and the maritime segment comprises UK land- and marine-based activities.
86GF Score
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Probability of Financial Distress (%) is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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