Shares in Electro Optic Systems Holdings Ltd (ASX: EOS) are in the green despite heavy losses on Wall Street overnight.
At the time of writing, the counter-drone defence company's shares are up 1.29% to $7.85.
That gain follows the release of the company's full-year result on Monday. The EOS share price climbed as high as $8.79 during the session before finishing at $7.75, up 5.87% from Friday's close of $7.32.
Despite recent price swings, the stock is still up around 500% over the past 12 months.
Image source: Getty Images
What did the latest numbers show?
For FY25, EOS reported revenue from continuing operations of $128.5 million, down 27% on the prior year. The decline was driven largely by lower activity in defence systems, where revenue fell to $115.8 million from $165.7 million.
Despite the lower revenue base, gross margin improved to 63%. Underlying EBITDA remained negative at $24.4 million, reflecting operating losses and ongoing investment. Statutory net profit after tax (NPAT) came in at $17.5 million, boosted by the sale of EM Solutions.
Importantly, the balance sheet strengthened. All borrowings were repaid during the year, and cash at bank stood at $106.9 million at 31 December 2025. The company has also secured a new $100 million term loan facility.
Order book drives the growth narrative
The standout figure in the results was the order book. EOS ended the year with an unconditional order book of $459 million, up from $136 million a year earlier.
During FY25, the company signed $424 million worth of contracts, compared with just $70 million in FY24. Key wins included major remote weapon system (RWS) contracts and high energy laser (HELW) awards.
Management said it aims to realise 40% to 50% of the current order book in 2026. If delivered, that would imply a material step up in revenue over the next year.
The company also announced the acquisition of MARSS, a Europe-based counter-drone C2 provider, in January. The deal expands EOS's capabilities and could support further order book growth, though integration will need to be managed carefully.
What is one broker saying?
Bell Potter remains positive on EOS shares. The broker retained its 'buy' rating after the results but reduced its price target to $9.70 from $12.00.
Based on today's price of $7.85, that suggests potential upside of roughly 25% over the next 12 months.
The broker acknowledged mixed earnings but highlighted the strong order intake, supportive defence spending backdrop and improving margin profile.
Foolish takeaway
EOS shares have already delivered exceptional gains over the past year.
The enlarged order book provides revenue visibility and supports expectations of growth in 2026. However, underlying profitability remains negative and the company must convert orders into cash flow.
If management can deliver on its guidance and margins hold up, there may still be room for further gains. But after a 500% run, expectations are higher and volatility is likely to continue.
