Shares of QinetiQ Group PLC (LSE:QQ) climbed 5% on Wednesday after the company reported its fiscal year 2025 results, which largely met the consensus estimates compiled by the company.

The defense and security company’s sales hit £1,932 million, aligning with the £1,931 million consensus.

Adjusted earnings before interest and taxes (EBIT), excluding Research & Development Expenditure Credit (RDEC), were slightly below consensus at £185 million compared to the anticipated £186 million.

Adjusted earnings per share (EPS) increased by 1.6% to 26.1 pence, surpassing the 25.7 pence consensus.

Despite a slight decrease in free cash flow (FCF) post-leases, which fell by 6% to £102 million versus the £109 million estimated by RBC, the company’s net debt improved to £133 million, better than both the consensus of £162 million and RBC’s estimate of £149 million.

Dividend per share (DPS) was reported at 8.85 pence, edging above the 8.8 pence consensus.

The company’s order intake at £1.95 billion, with a book-to-bill ratio of 1.2x, exceeded the long-term average of 1.1x.

The funded order backlog stood robustly at £2.85 billion, approximately 1.5 times the sales, although this was a decrease from the 3-year average of 1.8 times.

The share buyback program remained unchanged with an allocation of £200 million set to commence in June, as previously announced on March 17.

Looking forward, QinetiQ has narrowed its FY26 outlook, projecting around 3% sales growth at an approximate 11% adjusted EBIT margin.

This is a more conservative forecast compared to the previous range of 3-5% sales growth at an 11-12% margin.

The FY26 consensus anticipates a 3.5% year-on-year (YoY) increase in sales to £2 billion and an adjusted EBIT (ex RDEC) of £219 million, with a margin of 11%.

RBC analysts provided a more cautious perspective on the company’s valuation.

“Our view remains that QinetiQ’s discount to the sector is justified based on below-sector multi-year earnings growth driven mainly by share buybacks and ongoing uncertainties in the US,” RBC analysts said.