Back to top

Image: Bigstock

Why Is General Dynamics (GD) Up 0.5% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for General Dynamics (GD - Free Report) . Shares have added about 0.5% 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' Q2 Earnings Beat, Revenues Miss Estimates

General Dynamicsreported second-quarter 2021 earnings from continuing operations of $2.61 per share, which beat the Zacks Consensus Estimate of $2.52 by 3.6%.

Operating earnings improved 7% from $2.18 per share in the year-ago quarter.

Total Revenues

General Dynamics’ second-quarter revenues of $9,220 million missed the Zacks Consensus Estimate of $9,230 million by 0.1%. Revenues also declined 0.5% from $9,264 million in the year-ago quarter.

Backlog

General Dynamics recorded a total backlog of $89.2 billion, up 7.9% year over year. Funded backlog at the quarter-end was $41.1 billion.

Segmental Performance

Aerospace: The segment reported revenues of $1,662 million, down 17.8% year over year. However, operating earnings of $195 million improved 22.6% from the prior-year quarter’s $159 million.

Combat Systems: Segment revenues rose 8.3% from the prior-year quarter to $1,899 million. However, operating earnings were up 11.3% from the year-ago quarter to $266 million.

Technologies: The segment reported revenues of $3,163 million, which increased 3.2% year over year. Operating earnings of $308 million grew 24.7% from the prior-year quarter’s $247 million.

Marine Systems: The segment’s revenues of $2,536 million were up 2.6% from the year-ago quarter’s $2,471 million. Operating earnings also improved 5% year over year to $210 million.

Operational Highlights

Company-wide operating margin expanded 140 basis points (bps) to 10.4% from the year-ago quarter’s 9%.

In the quarter under review, General Dynamics’ operating costs and expenses increased 2.9% from the year-ago period to $16,712 million.

Interest expenses in the reported quarter declined 2.9% year over year to $232 million.

Financial Condition

As of Jul 4, 2021, General Dynamics’ cash and cash equivalents were $2,950 million compared with $2,824 million as of Dec 31, 2020.

Long-term debt as of Jun 28, 2021, was $11,485 million, which escalated from the 2020-end level of $9,995 million.

At the end of the first half of 2021, the company generated cash from operating activities of $1,118 million compared with $177 million generated in the year-ago period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, General Dynamics has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, General Dynamics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


General Dynamics Corporation (GD) - free report >>

Published in