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BAE SystemsBAESY -2.98%90 Forward Rate of Return (Yacktman) % is 15.33% as of Dec. 2025, which is 27% above its 10-year median of 12.04. GuruFocus rates BAESY with a GF Score™ of 90/100 and a GF Value™ of $97.95 (Modestly Overvalued). The stock has 2 warning signs investors should review. Among 203 Aerospace & Defense companies, BAE Systems ranks better than 59.61% on this metric.
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. BAE Systems's forward rate of return for was 15.33%.
The historical rank and industry rank for BAE Systems's Forward Rate of Return (Yacktman) % or its related term are showing as below:
BAESY'
s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: -6.45 Med: 12.04 Max: 16.18
Current: 14.69
During the past 13 years, BAE Systems's highest Forward Rate of Return was 16.18. The lowest was -6.45. And the median was 12.04.
BAESY's Forward Rate of Return (Yacktman) % is ranked better than 59.61% of 203
companies
in the Aerospace & Defense industry
Industry Median: 10.12
vs BAESY: 14.69
Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
BAE Systems (OTCPK:BAESY) Forward Rate of Return (Yacktman) % Explanation
Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.
Be Aware
In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.
BAE Systems Forward Rate of Return (Yacktman) % Related Terms
BAE Systems Forward Rate of Return (Yacktman) % Historical Data
* Premium members only.
The historical data trend for BAE Systems's Forward Rate of Return (Yacktman) % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
BAE Systems Forward Rate of Return (Yacktman) % Chart
BAESY vs SPCX, GE, RTX: Forward Rate of Return (Yacktman) % Comparison
For the Aerospace & Defense subindustry, BAE Systems's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % 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 Forward Rate of Return (Yacktman) % vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, BAE Systems's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where BAE Systems's Forward Rate of Return (Yacktman) % falls into.
BAE Systems Forward Rate of Return (Yacktman) % Calculation
Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):
If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.
The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).
BAE Systems's Forward Rate of Return of Dec. 2025 is
Forward Rate of Return
=
Normalized Free Cash Flow
/
Price
+
5-Year EBITDA Growth Rate
=
3.47
/
92.88
+
0.1097
=
14.71 %
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
What does a Forward Rate of Return (Yacktman) % of 15.33% mean?
BAE Systems (BAESY) has a Forward Rate of Return (Yacktman) % of 15.33% as of Dec. 2025. Yacktman's forward rate of return equals the sum of normalized free-cash-flow yield plus earnings growth. View historical data on BAE Systems and its competitors. This is 27% above median its historical median of 12.04. According to the industry distribution chart, BAE Systems ranks #82 out of 203 companies in the Aerospace & Defense industry, placing it in the top 40.4%.
Is BAE Systems' Forward Rate of Return (Yacktman) % too high?
BAE Systems' current Forward Rate of Return (Yacktman) % of 15.33% is 27% above median its 10-year median of 12.04. The Aerospace & Defense industry median Forward Rate of Return (Yacktman) % is 10.12. BAE Systems' value of 15.33% is 51.5% above this industry median. Based on the distribution chart, BAE Systems ranks #82 out of 203 companies in the Aerospace & Defense industry, which is above the industry midpoint. Overall, BAE Systems has a GF Score™ of 90/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does BAE Systems' Forward Rate of Return (Yacktman) % compare to SPCX and GE?
According to the Aerospace & Defense industry distribution chart, BAE Systems ranks #82 out of 203 companies for Forward Rate of Return (Yacktman) %. This puts BAE Systems in the upper half of its industry. The industry median Forward Rate of Return (Yacktman) % is 10.12. BAE Systems' value of 15.33% is 51.5% above this benchmark. While the company's 10-year median is 12.04 vs. the industry median of 10.12, BAE Systems has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Forward Rate of Return (Yacktman) % for an Aerospace & Defense company?
The median Forward Rate of Return (Yacktman) % among Aerospace & Defense companies is 10.12, based on 203 companies in the industry. Companies in the top quartile (top 25%) have a Forward Rate of Return (Yacktman) % significantly above this median, while those in the bottom quartile fall well below. However, Forward Rate of Return (Yacktman) % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. BAE Systems's current Forward Rate of Return (Yacktman) % of 15.33% is 51.5% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Forward Rate of Return (Yacktman) % mean?
A high Forward Rate of Return (Yacktman) % can signal that a stock is expensive relative to its fundamentals. Yacktman's forward rate of return equals the sum of normalized free-cash-flow yield plus earnings growth. View historical data on BAE Systems and its competitors. For the Aerospace & Defense industry, the median Forward Rate of Return (Yacktman) % is 10.12 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. BAE Systems's current Forward Rate of Return (Yacktman) % is 15.33%, which is 27% above median its own 10-year median of 12.04. 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 (BAESY) is currently considered Modestly Overvalued. The stock's GF Value™ is $97.95, compared to a current price of $110.24 — trading 12.5% above its estimated fair value. The current Forward Rate of Return (Yacktman) % is 15.33%, which is 27% above median its 10-year median of 12.04 and 51.5% above the Aerospace & Defense industry median of 10.12. BAE Systems' overall GF Score™ is 90/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Forward Rate of Return (Yacktman) % calculated?
Forward Rate of Return (Yacktman) % is calculated from a company's financial statements. For BAE Systems (BAESY), the current Forward Rate of Return (Yacktman) % is 15.33% as of Dec. 2025. 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 (BAESY) Overvalued in 2026?
Based on GuruFocus' analysis, BAE Systems stock appears to be overvalued.
The current stock price of $110.24 is trading 12.5% above its estimated GF Value™ of $97.95.
GuruFocus considers BAE Systems to be Modestly Overvalued.
Key valuation signals for BAESY:
Forward Rate of Return (Yacktman) %: 15.33% (27% above median its 10-year median of 12.04)
GF Value™: $97.95 vs. price of $110.24 (12.5% above fair value)
Industry Position: 51.5% above the Aerospace & Defense median (#82 of 203)
No single metric tells the full story. See the BAESY 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.
90GF Score
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Forward Rate of Return (Yacktman) % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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