Gilat Satellite: A Curious Dip

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So, Gilat Satellite Networks (GILT 18.01%) – a company dealing in the frankly astonishing business of bouncing signals off orbiting metal objects – had a bit of a tumble today. Down nearly 20%, which, in the stock market, is a bit like tripping over a particularly stubborn root while attempting a brisk walk. The odd thing is, they’d just announced results that, on the face of it, were rather good.

Analysts, those people who make educated guesses for a living (a surprisingly common profession), thought Gilat would earn a modest 14 cents a share on revenues of $78.1 million. Gilat, however, sailed past that, reporting 20 cents a share on sales of $137 million. A decisive victory, you might think. Like winning a game of croquet against someone who’d never seen a mallet. But the market, as anyone who’s ever spent more than five minutes looking at it will tell you, isn’t always logical.

Gilat Q4 Earnings: A Closer Look

And that’s where things get a little…complicated. The 75% jump in sales is impressive, certainly. Though one does wonder what they were selling before, and why it took so long to sell more of it. But operating income stayed pretty much flat. It’s a bit like running a marathon at the same speed as a brisk walk – a lot of effort for not much extra distance. The “adjusted” earnings – which, in financial jargon, usually means “earnings after we’ve tidied up the bits we don’t like” – were up. But the actual, generally accepted accounting principles (GAAP) earnings? Down 38%. It’s a bit like presenting a slightly retouched photograph – technically accurate, but not quite the whole story.

For the year as a whole, sales were up 48%, which is good. Operating profit was down 15%, which is less good. And net income was down 23%. A mixed bag, really. A bit like finding a ten-dollar bill in your old coat pocket, only to realize it’s been chewed by a moth.

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Is Gilat a Sell? A Question for the Ages

Looking ahead, Gilat expects sales to grow by 30% in 2026, reaching around $510 million. They’re also predicting “adjusted EBITDA” of $61 to $66 million. Which, as far as I can tell, is a measure of earnings before you deduct things like depreciation and, presumably, common sense. Notably absent from this forecast, however, are any projections for actual profits or, crucially, free cash flow. It’s a bit like promising a grand picnic without mentioning whether you’ve packed any food.

The CEO, Adi Sfadia, describes the quarter as “strong” and the year as “solid.” A perfectly reasonable assessment, I suppose. But the lack of clear earnings guidance, coupled with the fact that the stock currently trades at over 45 times trailing earnings (and those earnings are falling), gives me pause. It suggests that the market is pricing in a lot of future growth. And while optimism is admirable, it rarely pays the bills. On balance, I suspect this is a stock to approach with caution. Perhaps even a gentle, sideways shuffle in the opposite direction.

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2026-02-10 19:02