QinetiQ Group PLC (LSE:QQ) shares rose 5% on Wednesday after the company reported financial year 2025 results that were broadly in line with the company's compiled analyst expectations.

The defence and security company's sales came in at £1,932m, roughly in line with expectations of £1,931m.

Adjusted earnings before interest and tax (EBIT), excluding research and development expense credits (RDEC), were £185 million, slightly below the £186 million forecast.

Adjusted earnings per share (EPS) rose 1.6% to 26.1 pence, beating expectations for 25.7 pence.

Although free cash flow (FCF) after leases fell slightly, down 6% year-on-year to £102 million, below RBC's estimate of £109 million, the company's net debt improved to £133 million, better than market expectations of £162 million and RBC's estimate of £149 million.

Dividends per share (DPS) were reported at 8.85p, slightly ahead of expectations of 8.8p.

The company's order intake was £1.95 billion, giving it an order-to-sales ratio of 1.2 times, exceeding its long-term average of 1.1 times.

Funded order backlog was £2.85 billion, around 1.5 times sales but below the three-year average of 1.8 times.

The share buyback programme remains unchanged, with a £200 million buyback to commence in June, in line with the previous announcement on 17 March.

Looking ahead, QinetiQ narrowed its outlook for fiscal 2026, expecting sales growth of around 3% and an adjusted EBIT margin of around 11%.

The forecast is more conservative than its previous range of 3-5% sales growth and 11-12% profit margin.

Market expectations for the 2026 financial year are for sales to grow 3.5% year-on-year to £2 billion, with adjusted EBIT (excluding RDEC) of £219 million and a profit margin of 11%.

RBC analysts offered a more cautious view on the company's valuation.

"Our view remains that QinetiQ's discount to the sector is justified based on multi-year below-sector earnings growth (driven primarily by share buybacks) and ongoing uncertainty in the U.S.," RBC analysts said.