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General Dynamics Corporation (GD), headquartered in Reston, Virginia, is a global aerospace and defense company. Valued at $79.8 billion by market cap, the company offers a broad portfolio of products and services in business aviation, combat vehicles, weapons systems, munitions, shipbuilding design and construction, information systems, and technologies.
Shares of this defense giant have outperformed the broader market over the past year. GD has gained 30.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27.5%. However, in 2024, GD’s stock rose 12.1%, compared to the SPX’s 17.8% rise on a YTD basis.
Zooming in further, GD’s outperformance looks less pronounced compared to the SPDR S&P Aerospace & Defense ETF (XAR). The exchange-traded fund has gained about 28.5% over the past year. However, the ETF’s 12.8% gains on a YTD basis outshine the stock’s returns over the same time frame.
General Dynamics' strong stock performance can be attributed to its strategic joint venture with Lockheed Martin Corporation (LMT) to develop advanced military missile motors. This collaboration has accelerated the production of critical defense solutions, meeting high demand.
On Jul. 24, GD shares closed down more than 3% after reporting its Q2 results. Its EPS of $3.26 fell short of Wall Street expectations of $3.30. However, the company’s revenue was $12 billion, surpassing Wall Street forecasts of $11.5 billion. GD’s operating margin was 9.7%, up 20 bps from the year-ago quarter.
For the current fiscal year, ending in December, analysts expect GD’s EPS to grow 20.8% to $14.52 on a diluted basis. Yet, the company’s earnings surprise history is disappointing. It missed the consensus estimate in three of the last four quarters while beating the forecast on another occasion.
Among the 20 analysts covering GD stock, the consensus is a “Strong Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” and four “Holds.”
This configuration is more bullish than a month ago, with 14 analysts suggesting a “Strong Buy.”
On Aug. 7, Bank of America Securities analyst Ronald Epstein reiterated a “Buy” rating on GD with a price target of $330, implying a potential upside of 13.4% from current levels.
The mean price target of $326.89 represents a 12.3% premium to GD’s current price levels. The Street-high price target of $345 suggests an upside potential of 18.6%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
