General Dynamics Corporation (NYSE:GD) Just Released Its Yearly Earnings: Here's What Analysts Think
General Dynamics Corporation (NYSE:GD) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a credible result overall, with revenues of US$38b and statutory earnings per share of US$11.00 both in line with analyst estimates, showing that General Dynamics is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for General Dynamics
Following last week's earnings report, General Dynamics' twelve analysts are forecasting 2021 revenues to be US$38.7b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$11.14, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$38.9b and earnings per share (EPS) of US$11.39 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$167, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values General Dynamics at US$190 per share, while the most bearish prices it at US$137. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the General Dynamics' past performance and to peers in the same industry. We would highlight that General Dynamics' revenue growth is expected to slow, with forecast 2.0% increase next year well below the historical 6.1%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that General Dynamics is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for General Dynamics. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that General Dynamics' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple General Dynamics analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for General Dynamics that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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