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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' Q4 2025 Earnings: A Strong Finish to a Robust Year

General Dynamics reported fourth-quarter 2025 earnings of $4.17 per diluted share on revenue of $14.307 billion, operating earnings of $1.152 billion, and net earnings of $1.143 billion. Revenue growth was driven by the delivery of 158 new aircraft in Aerospace, which is 22 more than the year-ago quarter. The company's earnings per share (EPS) came in at $4.17, beating analyst estimates of $4.11. The revenue growth was accompanied by a 2% increase in operating earnings on a quarter-over-quarter basis.

Publication Date: Feb -02

📋 Highlights
  • Q4 Earnings Performance:: Reported $4.17 EPS on $14.307B revenue, with operating earnings up 2% to $1.152B.
  • Aerospace Growth:: Delivered 158 new aircraft (+22 vs. prior year), achieving a 1.3 book-to-bill ratio and $13.6B revenue guidance for 2026.
  • Combat Systems Momentum:: Revenue rose 5.8% to $2.5B, earnings up 7% to $381M, with a 10-basis-point margin improvement.
  • Marine Systems Surge:: Revenue jumped 21.7% to $4.8B, operating earnings surged 72.5% to $345M, and operating margin improved 210 basis points.
  • 2026 Financial Outlook:: Anticipates $54.3–54.8B total revenue, 10.4% operating margin, and $5.7B operating earnings at midpoint.

Segment Performance

Aerospace had a book-to-bill of 1.3 times in the quarter, and Gulfstream alone had an aircraft book-to-bill of 1.4 times, driven by the delivery of the G700 and G800 and their performance in customer hands. The defense businesses also performed well, with Combat Systems' revenue up 5.8% and operating earnings up 7%. Marine Systems' revenue was up 21.7%, with operating earnings up 72.5% on a 210 basis point improvement in operating margin.

Outlook and Guidance

The company expects revenue to be in the range of $54.3 billion to $54.8 billion for 2026, with operating margins of 10.4%, up 20 basis points from 2025 actuals. Aerospace revenue is expected to be around $13.6 billion, up around $500 million over 2025, with operating margin expected to increase to around 14%. Analysts estimate next year's revenue growth at 4.5%.

Valuation and Return Metrics

With a P/E Ratio of 22.51 and an EV/EBITDA of 16.49, the market appears to be pricing in a certain level of growth and profitability for General Dynamics. The company's ROE stands at 17.57%, and ROIC at 10.66%, indicating a strong return on equity and invested capital. The dividend yield is 1.71%, and the free cash flow yield is 4.17%, suggesting a reasonable payout and cash generation.

Investment Highlights

The company's strong backlog, driven by demand for its Aerospace and defense products, is expected to drive growth in the coming years. The investment in CapEx to support growing business, particularly in shipyards, is expected to accelerate production and meet future demand. With a net debt position of $5.7 billion, down $1.4 billion from 2024, the company's financial position appears solid.

3. NewsRoom

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Defense Behemoths: Winners and Loser During Q4 Earnings Cycle

Feb -02

Source: marketbeat.com

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General Dynamics Looks Undervalued As Submarines And Business Jets Ramp

Jan -30

Source: seekingalpha.com

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General Dynamics Q4 Earnings Call Highlights

Jan -30

Source: defenseworld.net

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General Dynamics Can Still Shoot Higher From Here

Jan -29

Source: seekingalpha.com

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General Dynamics Corp (GD) Q4 2025 Earnings Call Highlights: Record Backlog and Strong Revenue Growth

Jan -28

Source: gurufocus.com

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General Dynamics Corporation (GD) Q4 2025 Earnings Call Transcript

Jan -28

Source: seekingalpha.com

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Strong Marine Systems Performance Drives GD's Q4 Earnings and Revenues

Jan -28

Source: zacks.com

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General Dynamics (GD) Q4 Earnings: Taking a Look at Key Metrics Versus Estimates

Jan -28

Source: zacks.com

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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TransDigm Group

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Value: 3.0

Growth: 8.0

Quality: 6.7

Yield: 9.0

Momentum: 7.0

Volatility: 8.3

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General Dynamics

A-Score: 6.3/10

Value: 4.1

Growth: 4.7

Quality: 5.9

Yield: 4.0

Momentum: 9.0

Volatility: 10.0

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Quality: 6.4

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Yield: 4.0

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Growth: 3.4

Quality: 5.0

Yield: 4.0

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A-Score: 5.1/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

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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

352.4$

Current Price

352.4$

Potential

-0.00%

Expected Cash-Flows