GD  General Dynamics Corporation

Exchange

NYSE

Sector

Capital Goods

Industry

Marine Transportation

Market Cap.

61.42B

Vuru Grade

47.14/100

Current Price

$204.87
-0.54 (-0.26%)

Growth Price

$71.07
Overvalued by 65.31%

Stability Price

$44.57
Overvalued by 78.25%

Company Metrics

  • P/E 20.24
  • P/S 1.97
  • P/B 5.62
  • EPS 10.12
  • Cash ROIC 13.34%
  • Cash Ratio 0.18
  • Dividend 3.36 / 1.64%
  • Avg. Vol. 1.11M
  • Shares 299.80M
  • Market Cap. 61.42B

Company Description

General Dynamics Corporation provides business aviation; combat vehicles, weapons systems, and munitions; shipbuilding design and construction; and information systems, technologies, and services worldwide. Its Aerospace group provides mid-size and large-cabin Gulfstream business-jet aircraft, as well as offers maintenance, refurbishment, outfitting, and aircraft services for business-jet, wide-bo... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

General Dynamics To Thrive Because Of Rocket Man
Seeking Alpha - 3 hours ago
I recently wrote about how the defense companies that make missile defense systems will benefit from this ongoing situation. That article can be read at this link.
Better Buy: General Dynamics Corporation vs. Northrop Grumman
Motley Fool - Sep 18, 2017
Defense contractors have done well lately, responding to more favorable industry conditions both from a political standpoint and from the rise in the military threat level in recent years.
Head to Head Analysis: Northrop Grumman (NOC) vs. General Dynamics Corporation ... - The Ledger Gazette
Why We Passed On General Dynamics Stock
Seeking Alpha - Aug 30, 2017
However, we've avoided General Dynamics (GD) because we believe it has the weakest product portfolio out of the major US diversified defense contractors.
Dell EMC, Microsoft announce $1B Air Force contract
Seeking Alpha - Sep 20, 2017
Dell EMC, General Dynamics (NYSE:GD), and Microsoft (NASDAQ:MSFT) announce a $1B U.S. Air Force contract. The five-year contract covers implementing a Cloud Hosted Enterprise Services program to improve efficiency, agility, and innovation across ...
Dell EMC, General Dynamics and Microsoft Awarded $1 Billion Contract to ... - SYS-CON Media (press release)
General Dynamics (GD) Wins $24M Army Deal for Hydra Rockets
Nasdaq - Sep 19, 2017
General Dynamics CorporationGD announced that it has been awarded a $24-million contract by the U.S. Army. Per the terms of the order, the company will work on the modification of Hydra rockets.
General Dynamics Corporation (NYSE:GD) Shares Sold by Chicago Equity Partners LLC
The Ledger Gazette - 5 hours ago
General Dynamics Corporation logo Chicago Equity Partners LLC reduced its stake in General Dynamics Corporation (NYSE:GD) by 2.1% during the 2nd quarter, according to its most recent Form 13F filing with the Securities & Exchange Commission.
Lucrative Stocks in today's market: General Dynamics Corporation : GD - The News Journal
Martingale Asset Management LP Reduces Stake in General Dynamics Corporation (GD) - Dispatch Tribunal
Buy or Sell? What Analysts Recommends: General Dynamics Corporation (GD ...
StockNewsJournal - Sep 19, 2017
Investors who are keeping close eye on the stock of General Dynamics Corporation (NYSE:GD) established that the company was able to keep return on investment at - in the trailing twelve month while Reuters data showed that industry's average stands at ...
Risk Malaise Alert in Option Market: General Dynamics Corporation Implied ...
CML News - Sep 24, 2017
Before we dive into any analysis we simply note that General Dynamics Corporation (NYSE:GD) risk is actually priced pretty low by the option market as of right now.
Cubic Corporation (CUB) and General Dynamics Corporation (GD) Financial Comparison
The Ledger Gazette - Aug 30, 2017
General Dynamics Corporation (NYSE: GD) and Cubic Corporation (NYSE:CUB) are both aerospace companies, but which is the superior business?
Is It Too Late To Buy General Dynamics Corporation (GD)? - Simply Wall St
General Dynamics Corporation (NYSE:GD) Trading Down – Short interest grew by ... - Modern Readers
A Head-to-head Comparison of General Dynamics Corporation (GD) and Raytheon ...
Economic News - Sep 25, 2017
General Dynamics Corporation (NYSE:GD) and Raytheon Company (NYSE:RTN) are both Industrial Goods companies that recently hit new low.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for GD to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate GD's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$204.87 Current Price

$71.07 Growth Price (DCF)

Overvalued by 65.31%


Growth Rate Assumed by Market: 35.46%


Future Free Cash Flow Growth Rate: -3.1%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$44.57 Stability Price (EPV)

Overvalued by 78.25%


Discount Rate: 15.0%

$98.74 Book Price

Overvalued by 51.81%


Satisfactory Cash Return on Invested Capital over the past 5 years

GD has somewhat efficiently invested its financial resources in buildings, projects, and equipment. If CROIC is inconsistent, it's likely GD could be benefiting from a one-time event or has a mixed history of investing capital productively. Read the company's Annual Report to determine whether this can improve.

GD has created $13.34 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 2.24B 2.67B 3.21B 1.93B 1.81B
divided by
Invested Capital 19.39B 17.95B 17.22B 16.77B 17.69B
Cash ROIC 11.52% 14.85% 18.63% 11.51% 10.21%

Excellent Return on Equity over the past 5 years

Over the past 5 years, GD has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

GD has generated $17.86 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income -332.00M 2.36B 2.53B 2.97B 2.96B
divided by
Stockholders' Equity 11.39B 14.50B 11.83B 10.74B 10.98B
Return on Equity -2.91% 16.25% 21.41% 27.61% 26.92%

Excellent Business Performance over the past 10 years

GD has been able to maintain profitability in good times and bad. This could mean GD has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

GD has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 2.45B 2.62B 2.46B 2.62B 2.78B 2.24B 2.67B 3.21B 1.93B 1.81B

Weak Balance Sheet

GD's financial position is not ideal. The key is to check whether GD is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 2.89B 1.62B 2.26B 2.61B 2.65B 3.30B 5.30B 4.39B 2.79B 2.33B
Current Assets 12.30B 11.95B 13.25B 14.19B 15.37B 15.74B 17.89B 17.41B 14.57B 15.45B
Total Assets 25.73B 28.37B 31.08B 32.55B 34.88B 34.31B 35.45B 35.36B 32.00B 32.87B
Current Liabilities 9.16B 10.36B 10.37B 11.18B 11.15B 11.62B 12.19B 13.75B 12.45B 12.85B
Total Liabilities 13.97B 18.32B 18.65B 19.23B 21.65B 22.92B 20.95B 23.53B 21.26B 21.90B
Stockholder' Equity 11.77B 10.05B 12.42B 13.32B 13.23B 11.39B 14.50B 11.83B 10.74B 10.98B
Current Ratio 1.34 1.15 1.28 1.27 1.38 1.35 1.47 1.27 1.17 1.20
TL-to-TA 0.54 0.65 0.60 0.59 0.62 0.67 0.59 0.67 0.66 0.67

Consistent Reinvestment of Profits over the past 10 years

GD has consistently retained profits. This may put GD in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, GD can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 11.38B 13.29B 15.09B 17.08B 18.92B 17.86B 19.43B 21.13B 23.20B 25.23B
Retained Earnings Growth - 16.77% 13.59% 13.14% 10.78% -5.59% 8.78% 8.75% 9.83% 8.72%

Competitive Industry over the past 10 years

GD is likely operating in an industry with medium to low barriers to entry. This may mean that GD doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that GD invests heavily in R&D and Sales, General & Administrative expenses.

Only $7.29 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 2.07B 2.46B 2.39B 2.62B 2.53B -332.00M 2.36B 2.53B 2.97B 2.96B
divided by
Revenue 27.24B 29.30B 31.98B 32.47B 32.68B 31.51B 31.22B 30.85B 31.47B 31.35B
Net Profit Margin 7.61% 8.39% 7.49% 8.08% 7.73% -1.05% 7.55% 8.21% 9.42% 9.42%

Inconsistent Gross Profit Margins over the past 10 years

GD has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$25.28 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 3.11B 3.65B 5.63B 5.91B 32.68B 5.10B 5.76B 5.87B 6.13B 6.25B
divided by
Revenue 27.24B 29.30B 31.98B 32.47B 32.68B 31.51B 31.22B 30.85B 31.47B 31.35B
Gross Margin 11.43% 12.47% 17.60% 18.20% 100.00% 16.19% 18.46% 19.04% 19.48% 19.93%

Low Capital Intensity over the past 10 years

GD has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that GD may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

18.09% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 474.00M 490.00M 385.00M 370.00M 458.00M 450.00M 440.00M 521.00M 569.00M 392.00M
divided by
Net Income 2.07B 2.46B 2.39B 2.62B 2.53B -332.00M 2.36B 2.53B 2.97B 2.96B
Capital Expenditure Ratio 22.88% 19.93% 16.08% 14.10% 18.13% -135.54% 18.67% 20.57% 19.19% 13.27%

Very Strong Dividend History over the past 10 years

GD has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests GD is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 445.00M 533.00M 577.00M 631.00M 673.00M 893.00M 591.00M 822.00M 873.00M 911.00M
divided by
Shares Outstanding 408.15M 398.75M 387.90M 385.24M 367.52M 353.30M 353.50M 341.33M 326.65M 310.39M
Dividend Paid Per Share 1.09 1.34 1.49 1.64 1.83 2.53 1.67 2.41 2.67 2.94
Price at Year End 80.38 51.80 64.82 68.44 65.97 67.88 95.10 139.63 139.26 172.66
Dividend Yield 1.36% 2.58% 2.29% 2.39% 2.78% 3.72% 1.76% 1.72% 1.92% 1.70%

Strong History of Stock Buybacks over the past 10 years

GD has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 408.15M 398.75M 387.90M 385.24M 367.52M 353.30M 353.50M 341.33M 326.65M 310.39M
Stock Bought Back - 2.36% 2.80% 0.69% 4.82% 4.03% -0.06% 3.56% 4.49% 5.24%
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Discussion
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1
Posted by bing281  (on July 31, 2014)
GD is a large company which has very inefficient management and processes which cause them to be outbid and outperformed by more modern companies in their own field. Even if the contracts continue from the government which budget cuts say that they will not, GD will continue not to win them time and again because of being overpriced and under delivering.
0
Posted by rango55  (on March 20, 2012)
I'm hedging that the US will be at war with Iran in the next 2 years. Between that and how undervalued GD is, I just put in a 100 share buy. This one is gonna fly
2
Posted by pbanik  (on May 29, 2014)
@rango55 Well, I think this President is more likely to cut military involvement and hence spending. If you want a company in this sector, L-3 Communications Holdings Inc. (NYSE:LLL) is undervalued. http://quotes.morningstar.com/stock/lll/s?t=LLL, and probably the stock to own now from that sector and industry. It's significantly undervalued if you look at this website and Valuecruncher and Valuepro.net. I would rather own LLL now than GD, RTN, or most any other aerospace&defense stock in the industrials sector right now.