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1. Company Snapshot

1.a. Company Description

General Dynamics Corporation operates as an aerospace and defense company worldwide.It operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies.The Aerospace segment designs, manufactures, and sells business jets; and offers aircraft maintenance and repair, management, charter, aircraft-on-ground support and completion, staffing, and fixed-base operator services.


The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers, as well as builds crude oil and product tankers, and container and cargo ships.This segment also provides navy ships maintenance and modernization services; lifecycle support and repair services for navy surface ships; and program management, planning, engineering, and design support services for submarines and surface ships.The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles, and armaments.


This segment also offers modernization programs, engineering, support, and sustainment services.The Technologies segment provides information technology solutions and mission support services; mobile communication, computers, and command-and-control mission systems; and intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers.This segment also offers cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations; software-defined networks; everything-as-a-service; defense enterprise office system solutions; and unmanned undersea vehicle manufacturing and assembly services.


General Dynamics Corporation was founded in 1899 and is headquartered in Reston, Virginia.

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1.b. Last Insights on GD

General Dynamics' recent performance was driven by strong Q2 earnings, which beat estimates, and a solid backlog. The company's revenue grew 8.9% year-over-year, driven by robust order activity in its Marine and Aerospace segments. Additionally, the company's Gulfstream business jet deliveries are on track, supporting near-term revenue growth and meeting key operational milestones. The company's strong fundamentals, diversified portfolio, and reasonable valuation make it an attractive play.

1.c. Company Highlights

2. General Dynamics Beats Expectations with Strong Q3 2025 Earnings

General Dynamics reported earnings of $3.88 per diluted share on revenue of $12.9 billion, operating earnings of $1.3 billion, and net income of $1.059 billion. Revenue increased $1.24 billion, a strong 10.6%, led by a 30.3% increase in the Aerospace segment and a 13.8% increase in Marine Systems over the year-ago quarter. The company's operating earnings of $1.3 billion are up $150 million or 12.7%, and net earnings increased $129 million or 13.9% over the year-ago quarter. According to Phebe Novakovic, Chairman and Chief Executive Officer, "Across the company, revenue increased $1.24 billion, a strong 10.6%, led by a 30.3% increase in our Aerospace segment and a 13.8% increase in Marine Systems over the year-ago quarter."

Publication Date: Oct -25

📋 Highlights
  • Revenue Growth: Q3 revenue rose 10.6% to $12.9 billion, driven by 30.3% in Aerospace ($3.2 billion) and 13.8% in Marine Systems ($4.1 billion).
  • Earnings Expansion: Operating earnings grew 12.7% to $1.3 billion, and net income increased 13.9% to $1.059 billion, with EPS up 19% to $3.88.
  • Cash Flow Strength: Generated $2.1 billion in operating cash flow ($1.9 billion free cash flow, 179% of net income), exceeding estimates.
  • Backlog Growth: Year-end backlog surged 19% to $109.9 billion, with total contract value hitting a record $167.7 billion.
  • Outlook Raised: Raised EPS guidance to $15.30–$15.35, projecting annual revenue near $52 billion and 10.3% margins, amid cautious stance on government shutdown risks.

Segment Performance

Aerospace performed very well in the quarter, with revenue of $3.2 billion and operating earnings of $430 million. Revenue increased by 30.3% over the year-ago quarter, and operating earnings showed a 41% increase. Marine Systems revenue of $4.1 billion is up $497 million, 13.8% against the year-ago quarter. The company's backlog at the end of the quarter is $109.9 billion, up 19% from a year ago and 6% from last quarter.

Cash Flow and Guidance

The company's free cash flow in the quarter was $1.9 billion, or 179% of net income. Kimberly Kuryea, Chief Financial Officer, stated that the business units "really outperformed our cash flow generation estimates for the quarter, driven by solid cash collections." The company has increased its EPS forecast to between $15.30 to $15.35 and sees annual revenue of around $52 billion and margins of around 10.3%.

Valuation

With a P/E Ratio of 22.37 and an EV/EBITDA of 17.92, the company's valuation appears to be reasonable considering its strong growth prospects. The ROE of 18.27% and ROIC of 11.03% indicate a strong return on equity and invested capital. Analysts estimate next year's revenue growth at 4.3%, which is lower than the current year's growth rate. The actual EPS of $3.88 beat estimates of $3.7, indicating a positive surprise.

Outlook

The company's guidance and outlook appear to be positive, driven by strong demand in the Aerospace and Marine Systems segments. The company's investment in its business over the last 7 years and its strong position in the European market are expected to drive growth. However, the government shutdown may have an impact on cash collection and contracts, and the company is taking a prudent approach in this uncertain environment.

3. NewsRoom

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General Dynamics NASSCO and South Korean Shipbuilding Leaders DSEC Co. and Samsung Heavy Industries Co. Sign Tri-Party Memorandum of Agreement

Dec -04

Source: prnewswire.com

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General Dynamics Board Declares Dividend

Dec -03

Source: prnewswire.com

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Arrowstreet Capital Limited Partnership Sells 4,880 Shares of General Dynamics Corporation $GD

Dec -03

Source: defenseworld.net

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3 Stocks to Watch as Geopolitics Drives Defense Spending Boom

Dec -01

Source: zacks.com

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Best Dividend Aristocrats For December 2025

Nov -29

Source: seekingalpha.com

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BA vs. GD: Who's the Clear Leader in the Defense Modernization Boom?

Nov -26

Source: zacks.com

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17 Capital Partners LLC Trims Holdings in General Dynamics Corporation $GD

Nov -20

Source: defenseworld.net

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Alteri Wealth LLC Purchases 239 Shares of General Dynamics Corporation $GD

Nov -19

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.98%)

6. Segments

Marine Systems

Expected Growth: 3.5%

Marine Systems' 3.5% growth is driven by increased demand for naval vessels, submarines, and surface combatants. Backlog growth and long-term contracts with the US Navy and international customers also contribute to the segment's growth. Additionally, technological advancements and investments in electric propulsion and autonomous systems enhance the segment's offerings.

Technologies

Expected Growth: 4.2%

General Dynamics' technology segment growth of 4.2% is driven by increasing demand for advanced combat systems, cybersecurity solutions, and IT services. The company's innovation in areas like artificial intelligence, data analytics, and cloud computing is also fueling growth, as governments and industries seek to modernize their technological capabilities.

Aerospace

Expected Growth: 4.5%

General Dynamics Corporation's Aerospace segment growth of 4.5% is driven by increased demand for military aircraft, space systems, and commercial aviation products. The company's backlog of $13.7B, including $7.2B in Aerospace, provides visibility and supports continued growth. Additionally, GD's focus on innovation, such as the Gulfstream G650ER, and strategic acquisitions contribute to its strong performance.

Combat Systems

Expected Growth: 3.8%

Combat Systems' 3.8% growth driven by increased demand for military modernization, particularly in missile systems and armored vehicles. Favorable geopolitical climate and government budget allocations support growth. Backlog conversion and operational efficiencies also contribute to segment's steady expansion.

7. Detailed Products

Abrams M1 Tank

A third-generation main battle tank designed for the US Army, known for its mobility, firepower, and survivability.

Gulfstream G650ER Business Jet

A high-performance, long-range business jet designed for luxury and comfort, featuring advanced avionics and a spacious cabin.

Stryker Armored Vehicle

A family of wheeled armored vehicles designed for rapid deployment, mobility, and survivability, used for a variety of military and peacekeeping operations.

Virginia-Class Submarine

A class of nuclear-powered attack submarines designed for stealth, endurance, and combat capability, used for a variety of naval operations.

IT and Mission Systems

A range of IT and mission systems designed to support military, government, and commercial customers, including cybersecurity, cloud computing, and data analytics.

8. General Dynamics Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

General Dynamics Corporation operates in the defense industry, which has a moderate threat of substitutes. While there are some substitutes for defense products and services, the high barriers to entry and the specialized nature of the industry limit the threat of substitutes.

Bargaining Power Of Customers

The bargaining power of customers is low in the defense industry, as the government is the primary customer and has limited alternatives. General Dynamics Corporation has a strong relationship with the government, which reduces the bargaining power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate in the defense industry. While there are some suppliers that have significant bargaining power, General Dynamics Corporation's size and scale of operations reduce its dependence on any one supplier.

Threat Of New Entrants

The threat of new entrants is low in the defense industry, as the barriers to entry are high. The industry requires significant capital investments, specialized technology, and a strong understanding of the defense sector, making it difficult for new entrants to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high in the defense industry, as there are several established players competing for a limited number of contracts. General Dynamics Corporation faces intense competition from other defense contractors, which can lead to lower prices and reduced profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 34.23%
Debt Cost 4.33%
Equity Weight 65.77%
Equity Cost 7.26%
WACC 6.26%
Leverage 52.04%

11. Quality Control: General Dynamics Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

337.31$

Current Price

337.31$

Potential

-0.00%

Expected Cash-Flows