General Dynamics Corporation

Financial Performance

5Y price score: 91

10Y return: 156.9%

DATE RANGE:

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306.7

52-week range

400.0

344.23

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Required return / cost of capital

FCFF terminal growth rate

Your fair value & Margin of safety

To calculate fair value based on cost of capital and terminal growth assumptions above, please select free cash flow forecast.

Forecast:

Valuation

Free Cash Flow Yield

6.9 %

Dividend Yield TTM

1.8 %

Market cap $

$ 93,134

Price / Earnings TTM

Price / Book TTM

3.5

PEG TTM

1.6

Earnings growth and return

LTM

5YR

10YR

Total return (price & dividends)

5.9 %

78.1 %

156.9 %

Free cash flow per share growth

16.3 %

43.9 %

144.7 %

Earnings per share growth

13.6 %

40.5 %

70.3 %

Founded: 1,952

Employees: 110,000

Business Summary: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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Fair Value Reference Estimate

Latest Earnings Call Takeaways

2026 Q2 (Jul 29, 2026)

1) Strong Financial Performance - Reported earnings of $4.24 per diluted share on revenue of $14.1 billion, with operating earnings of $1.460 billion and net earnings of $1.160 billion. - Year-over-year comparisons show revenue growth of 8.1%, operating earnings up 12%, and net earnings up 14.4%. - Operating margin improved to 10.4%, a 40-basis-point increase from the previous year. - Year-to-date revenue reached $27.6 billion, up 9.1%, with operating earnings nearly $2.9 billion, up 11.9%.

2) Segment Highlights and Growth - Aerospace: Revenue of $3.5 billion, operating earnings of $510 million, and a 14.5% operating margin, reflecting a 15.1% increase in revenue year-over-year. - Combat Systems: Revenue of $2.3 billion with operating earnings of $318 million; book-to-bill ratio at 2.1x, indicating strong demand. - Marine Systems: Revenue growth of 10.4% driven by Columbia and Virginia-class programs, with earnings improving 17.5%. - Technologies: Revenue of $3.6 billion, up 4.1%, with operating earnings of $339 million.

3) Cash Flow and Capital Management - Generated $1.9 billion in operating cash flow for the quarter, totaling over $4 billion for the first half of the year. - Free cash flow reached $1.6 billion for the quarter, with a cash conversion rate of 142%. - Anticipated capital expenditures between 3.5% and 4% of sales for the full year, with a planned $500 million contribution to pension plans.

4) Backlog and Order Activity - Achieved a record backlog of $136.5 billion, up 32% year-over-year, with a total estimated contract value of $186.9 billion. - Strong order activity with nearly $20 billion in orders this quarter, resulting in a company-wide book-to-bill ratio of 1.4-to-1. - Notable demand in Aerospace and Defense, particularly for Combat Systems and Marine products.

5) Guidance and Outlook - Increased full-year EPS guidance to $16.80 to $16.90. - Expected revenue breakdown: Aerospace at $13.8 billion, Combat at $9.8 billion, Marine at $18 billion, and Technologies at $14.1 billion. - Anticipated operating margin for the company at 10.5% for 2026, with a focus on continued growth and operational improvements.

Bottom line: General Dynamics demonstrated robust financial performance in Q2 2026, with significant revenue and earnings growth across all segments, a strong backlog, and positive cash flow generation. The company is well-positioned for continued growth, supported by a solid order pipeline and strategic investments, making it an attractive proposition for shareholders.

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