General Dynamics (GD) Up 1.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for General Dynamics (GD). Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is General Dynamics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
General Dynamics Q3 Earnings Top, Revenues Rise Y/Y
General Dynamics reported third-quarter 2022 earnings per share (EPS) of $3.26, which beat the Zacks Consensus Estimate of $3.16 by 3.2%. Quarterly earnings increased 6.2% from $3.07 per share in the year-ago quarter.
Total Revenues
General Dynamics’ third-quarter revenues of $9,975 million beat the Zacks Consensus Estimate of $9,919 million by 0.6%. Revenues also improved 4.3% from the year-ago quarter.
Segmental Performance
Aerospace: The segment reported revenues of $2,347 million, up 13.6% year over year. Operating earnings of $312 million increased 19.1% from the prior-year quarter’s $262 million.
Marine Systems: This segment’s revenues rose 5% from the prior-year quarter to $2,769 million. Operating earnings were up 3.9% from the year-ago quarter to $238 million.
Technologies: The segment’s reported revenues of $3,071 million decreased 1.6% year over year. Operating earnings of $285 million declined 12.8% from the prior-year quarter’s $327 million.
Combat Systems: The segment’s revenues of $1,788 million were up 2.5% from the year-ago quarter’s $1,745 million. Operating earnings also declined 1.8% year over year to $271 million.
Operational Highlights
For the reported quarter, GD’s operating margin contracted 30 basis points from the year-ago quarter’s reported figure to 11%.
For the quarter under review, General Dynamics’ operating costs and expenses went up 4.6% from the year-ago period to $8,877 million.
Interest expenses for the reported quarter declined 13.1% year over year to $86 million.
Backlog
General Dynamics recorded a total backlog of $88.80 billion, up 1.3% from second-quarter 2022’s backlog of $87.63 billion. The funded backlog at third-quarter end was $61.61 billion.
Financial Condition
As of Oct 2, 2022, General Dynamics’ cash and cash equivalents were $2,496 million compared with $1,603 million as of Dec 31, 2021.
Long-term debt as of Oct 2, 2022 was $9,239 million, down from the 2021-end level of $10,490 million.
As of Oct 2, 2022, GD generated cash from operating activities of $3,910 million, up from $2,589 million generated in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, General Dynamics has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, General Dynamics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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General Dynamics Corporation (GD) : Free Stock Analysis Report
