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General Dynamics Corp GD

Morningstar Rating
$294.88 +3.61 (1.24%)
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Company Report

We Think General Dynamics Keeps Its Moat Wide Through Disciplined Reinvestment

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which we view positively because we don’t see substantial growth in this industry. Indeed, defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US, both have been on the rise, and among many allies, notably Germany and Japan, geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to contractors like General Dynamics and its competitors and subcontractors shrank between 2012 and 2017 by 2.6% annualized while these budgets grew between 2018 and 2023 by 6.5% annualized. We think the contractors' budget will continue to grow with modernization, but more moderately, averaging around 2.5%-3.0% over the next five years.

Price vs Fair Value

GD is trading at a 46% premium.
Price
$291.21
Fair Value
$429.00
Uncertainty
Low
1-Star Price
$774.00
5-Star Price
$463.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

General Dynamics’ Gulfstream franchise has top-tier volume share and margin in the large end of the business jet market and has successfully transitioned to new models like the G700. Business jets are in high demand as the pandemic wanes.

Bears

General Dynamics depends on US military funding, which is an inherently political and thus uncertain process.

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News

Trading Information

Previous Close Price
$291.27
Day Range
$292.40295.64
52-Week Range
$213.50302.67
Bid/Ask
$294.87 / $295.17
Market Cap
$80.96 Bil
Volume/Avg
241,221 / 1.0 Mil

Key Statistics

Price/Earnings (Normalized)
23.75
Price/Sales
1.86
Dividend Yield (Trailing)
1.88%
Dividend Yield (Forward)
1.95%
Total Yield
2.44%

Company Profile

General Dynamics is a defense contractor and business jet manufacturer. The firm’s segments include aerospace, marine, combat systems, and technology. General Dynamics' aerospace segment creates Gulfstream business jets and operates a global aircraft servicing operation. Combat systems produces land-based combat vehicles such as the M1 Abrams tank and Stryker armored personnel carrier, as well as munitions. The marine segment builds and services nuclear-powered submarines, destroyers, and other ships. The technologies segment contains two main units, an IT business that primarily serves the government market and a mission systems business that focuses on products that provide command, control, computing, intelligence, surveillance, and reconnaissance capabilities to the military.
Sector
Industrials
Industry
Aerospace & Defense
Stock Style Box
Large Core
Total Number of Employees
111,600

Competitors

Valuation

Metric
GD
BA.
BBD.B
Price/Earnings (Normalized)
23.7519.4721.62
Price/Book Value
3.733.67
Price/Sales
1.861.700.91
Price/Cash Flow
20.1017.229.75
Price/Earnings
GD
BA.
BBD.B

Financial Strength

Metric
GD
BA.
BBD.B
Quick Ratio
0.760.860.27
Current Ratio
1.441.081.03
Interest Coverage
13.197.351.50
Quick Ratio
GD
BA.
BBD.B

Profitability

Metric
GD
BA.
BBD.B
Return on Assets (Normalized)
6.58%6.08%2.39%
Return on Equity (Normalized)
17.44%17.75%
Return on Invested Capital (Normalized)
12.06%11.67%18.19%
Return on Assets
GD
BA.
BBD.B
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