1-Star Price
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5-Star Price
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Economic Moat
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Capital Allocation
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Wide-moat General Dynamics reported a strong first quarter that beat FactSet consensus sales by 5.7% and EPS by 7.8% as it focuses on executing on the G700 entry to service and the Columbia class submarine. EPS grew 2.1% to $2.49. We are increasing our fair value estimate by about 2% to $189 per share as we incorporate a somewhat higher revenue forecast into our model, and we think shares are fairly valued.
General Dynamics is a long-cycle defense contractor and business jet manufacturer. The firm’s segments include aerospace, combat systems, marine, information technology, and mission systems. The company’s aerospace segment creates Gulfstream business jets. Combat systems mostly produces land-based combat vehicles, such as the M1 Abrams tank. The marine subsegment creates nuclear-powered submarines, among other things. The information technology business primarily serves the government market. The mission systems segment focuses on products that provide command, control, computers, intelligence, surveillance, and reconnaissance capabilities to the military.
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