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General Dynamics' (GD) Q3 Earnings Beat, Revenues Down Y/Y

Zacks Equity Research
·4 min read

General Dynamics Corporation GD reported third-quarter 2020 earnings from continuing operations of $2.90 per share, which beat the Zacks Consensus Estimate of $2.85 by 1.8%. The bottom line, however, declined 7.6% from the prior-year quarter’s $3.14 per share.

The company reported GAAP earnings of $2.91 per share compared with the year-ago quarter’s $3.17.

Total Revenues

General Dynamics’ third-quarter revenues of $9,431 million missed the Zacks Consensus Estimate of $9,596 million by 1.7%. Further, revenues declined 3.4% from $9,761 million in the year-ago quarter. The year-over-year decrease can be attributed to the decline in the Aerospace and the Information Technology segments.

Backlog

General Dynamics’ total backlog at the end of third-quarter 2020 was $81.5 billion, up 21% from the year-ago quarter. Estimated potential contract value, representing management’s estimate of value in contracts and unexercised options, was $50.4 billion. Total estimated contract value, the sum of all backlog components, was $131.9 billion.

Segmental Performance

Aerospace: The segment reported revenues of $1,975 million, down 20.8% year over year. Operating earnings of $283 million declined 28% from the prior-year quarter’s $393 million.

Combat Systems: Segment revenues rose 3.5% from the prior-year quarter to $1,801 million. Moreover, operating earnings were up 2.3% from the year-ago quarter to $270 million.

Information Systems and Technology: The segment reported revenues of $2,029 million, which declined 2% year over year. Operating earnings of $146 million in the quarter remained flat year over year.

Mission Systems: The segment’s revenues of $1,221 million improved a mere 0.1% from the year-ago quarter’s $1,220 million. Operating earnings of $168 million fell 9.2% from the year-ago quarter’s $185 million.

Marine Systems: The segment’s revenues of $2,405 million were up 7.6% from the year-ago quarter’s $2,235 million. Operating earnings also improved 6.7% year over year to $223 million.

General Dynamics Corporation Price, Consensus and EPS Surprise

General Dynamics Corporation Price, Consensus and EPS Surprise
General Dynamics Corporation Price, Consensus and EPS Surprise

General Dynamics Corporation price-consensus-eps-surprise-chart | General Dynamics Corporation Quote

Operational Highlights

Company-wide operating margin contracted 100 basis points (bps) to 11.5% from the year-ago quarter’s 12.5%.

In the quarter under review, General Dynamics’ operating costs and expenses declined 2.3% from the year-ago period to $8,347 million.

Interest expenses in the reported quarter amounted to $118 million, up from $114 million registered in the year-ago quarter.

Financial Condition

As of Sep 27, 2020, General Dynamics’ cash and cash equivalents were $1,469 million compared with $902 million on Dec 31, 2019.

Long-term debt as of Sep 27, 2020, was $9,978 million, which rose from the 2019-end level of $9,010 million.

In the first nine months of 2020, the company’s cash provided by operating activities was $1,296 million compared with $587 million in the year-ago period.

Zacks Rank

General Dynamics currently carries a Zacks Rank #4 (Sell).

Recent Releases

Lockheed Martin LMT, a Zacks Rank #3 (Hold) company, reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northrop Grumman NOC, a Zacks Rank #4 company, reported third-quarter 2020 earnings of $5.89 per share, which surpassed the Zacks Consensus Estimate of $5.60 by 5.2%.

Teledyne Technologies TDY, a Zacks Rank #2 (Buy) company, reported third-quarter 2020 adjusted earnings of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.40 by 3.3%.

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