GD

What General Dynamics (GD) Investors Need to Know

General Dynamics logged a 0.47% change today, and is now trading at a price of $220.27 per share.

General Dynamics Corporation (GD) is an American aerospace and defense corporation that has returned a 2.42% dividend yield over the last 12 months.

EPS Growth Sustained Primarily by Reducing the Number of Shares Outstanding with Healthy Leverage Levels:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $39,350 $37,925 $38,469 $39,407
Revenue Growth n/a -3.62% 1.43% 2.44%
Operating Margins 11.61% 10.9% 10.82% 10.69%
Operating Margins Growth n/a -6.12% -0.73% -1.2%
Earnings Per Share $12.03 $11.05 $11.73 $12.35
EPS Growth n/a -8.15% 6.15% 5.29%
Diluted Shares (MM) 290 286 278 274
Free Cash Flow (MM) $1,994 $2,891 $3,384 $3,465
FCF Growth n/a 44.98% 17.05% 2.39%
Capital Expenditures (MM) $987 $967 $887 $1,114
Net Debt / EBITDA 2.59 2.66 2.18 2.0

General Dynamics Is Reasonably Priced:

General Dynamics has a trailing twelve month P/E ratio of 18.07 compared to the Industrials sector's average of 20.49. The company doesn't issue forward earnings guidance, and the annual average growth rate of its last 5 years of reported EPS is 1.75%. On this basis, the company's PEG ratio is 10.33, which suggests that it is overpriced.

The market is giving General Dynamics a fair value in terms of its book value, since its P/B ratio of 3.873 is consistent with its sector average, which stands at 3.78. The company's shares are currently trading 64.54% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 11.75 * 67.79) = $133.87

General Dynamics's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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