Defence Primes Sector Primer
A 44-page primer plus Excel valuation model on defence prime equity analysis: backlog, book-to-bill, contract mix, FCF conversion and the FCF-yield screen.
PDF Only
The full primer in PDF format
£25 / ~$32- ✓ 44-page sector primer
- ✓ Worked valuations
- ✓ Screening thresholds
Excel Model
Plug-and-play valuation template
£45 / ~$58- ✓ Pre-built valuation model
- ✓ Sensitivity tables
- ✓ Scenario toggles
PDF + Model
Everything you need in one package
- ✓ 44-page sector primer
- ✓ Valuation model (.xlsx)
- ✓ Save £11 vs buying separately
Three primers, three Excel models
Defence Primes, Commercial Aerospace, and Space & Satellites. Everything at ~25% off
Inside the primer
The 15-section contents, a worked valuation page, and the Excel dashboard.
Table of Contents
- 01 How Defence Primes Make Money
- 02 Listed Company Types
- 03 The Programme Lifecycle
- 04 Segments and Sub-Markets
- 05 Revenue Drivers: Generic Build
- 06 Cost Structure: Contracts and Cash
- 07 Valuation Frameworks
- 08 Worked Examples: Ten-Year DCF Valuation
- 09 Applied Cases: Platform Primes
- 10 Applied Cases: Systems Integrators
- 11 Key Metrics and Screening
- 12 Risks and Red Flags
- 13 Benchmarks and Case Study
- 14 Glossary of Essential Terms
- 15 Quick Reference Cheat Sheet
44 pages · 15 sections · 2 worked archetypes
The Excel model
Educational material for professional use. This primer and its model are not investment advice or a recommendation to buy or sell any security, and they are not personalised. Worked valuations use illustrative calibrations, not fair-value estimates for any company.
Defence primes sell to one customer on multi-year programmes, so the value sits in the backlog and in how much of each reported dollar becomes cash. Appropriated budgets decide what gets awarded, the contract type decides who carries the cost risk, and pension accounting opens a gap between earnings and free cash flow that a plain industrial DCF never sees. Book-to-bill says whether the backlog is growing. Conversion says whether the earnings are real.
The primer builds those tools in order: how a prime makes money, the listed company types, the programme lifecycle from award to sustainment, then contract economics and the cash bridge. Two worked examples run a ten-year backlog-driven DCF from first input to value per share, a platform prime and a diversified systems house, before applied cases on Lockheed Martin, RTX, Northrop Grumman, General Dynamics, L3Harris and BAE Systems. Screening closes with FCF-yield bands, programme concentration and segment margin dispersion.
Free guides on the site cover the individual pieces, so you can revise one idea without reopening the PDF: backlog and book-to-bill, book-to-bill benchmarks, funded vs unfunded backlog, FAS vs CAS pension accounting, FCF conversion for primes, cost-plus vs fixed-price contracts, the budget and demand cycle and the FCF-yield screen. Research profiles for LMT, RTX, NOC, GD, LHX and BAE run the same screens on filed results. The companion Excel model spans eleven sheets, from two archetype tabs through the backlog and conversion screens to a live sensitivity grid, so swapping in your own prime rebuilds the valuation from the backlog up.
Sheets: Quick Start, Instructions, Assumptions, Platform Prime, Diversified Systems, Valuation Summary, Backlog & Book-to-Bill, FCF Conversion Bridge, Programme Concentration, Sensitivity, Dashboard.
See this methodology applied to a real company:
Lockheed Martin (LMT) →