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Strong Order Growth to Fuel General Dynamics (GD) Q4 Earnings
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General Dynamics Corporation (GD - Free Report) is scheduled to release fourth-quarter and 2018 results on Jan 30, before the opening bell.
A steady trend of contract wins should boost General Dynamics’ revenues in the fourth quarter. Moreover, the acquisition of CSRA is likely to continue driving the company’s operational results.
Let’s take a detailed look at factors influencing General Dynamics’ quarterly results.
Robust Orders to Boost Sales
General Dynamics, being the largest military shipbuilders in the United States, enjoys a steady flow of orders from both the Pentagon and its foreign allies. Keeping up with the usual trend, the company acquired significant contracts in the fourth quarter.
These contracts include a $3.9-billion deal for the construction of four Arleigh Burke-class destroyers. Such massive order growth is likely to have a favorable impact on the company’s backlog, which should reflect in the upcoming quarterly results.
In fact, the company usually wins such contracts, which, in turn, boost its sales growth. Keeping with this trend, we can expect General Dynamics to witness solid revenue growth in the fourth quarter. In line with this, the Zacks Consensus Estimate for the company’s sales in the fourth quarter is pegged at $10.29 billion, reflecting a 24.3% year-over-year surge.
Aerospace Segment Witnesses Growth
General Dynamics’ Aerospace segment’s revenues are expected to receive solid boost in the fourth quarter, with the expected delivery of 8-10 G500s. Moreover, the segment’s Gulfstream Aerospace has been making significant progress on both cost and schedule related to the production of nacelles, post the NORDAM Group acquisition. Deliveries of nacelles are in line to support the G500s deliveries during the reported quarter.
These developments, in turn, make us confident of possible revenue growth at this business unit. In line with this, the Zacks Consensus Estimate for the segment’s revenues in the fourth quarter is pegged at $2,689 million, reflecting a year-over-year surge of 35.7%.
CSRA Acquisition to Continue Boosting Growth
In the first week of April 2018, General Dynamics successfully completed the acquisition of CSRA Inc., an IT service provider, for $9.7 billion. Management continues to expect the buyout to increase its revenues by $3.6 billion in 2018.
As the acquisition turned out to be modestly accretive to third-quarter revenues, we expect this to be accretive to the company’s fourth-quarter revenues as well. This should aid its bottom line. Consequently, the Zacks Consensus Estimate for General Dynamics’ fourth-quarter earnings is pegged at $2.98, reflecting 19.2% annual improvement.
General Dynamics Corporation Price and EPS Surprise
Our proven model does not conclusively show that General Dynamics is likely to beat estimates in the fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.
Earnings ESP: General Dynamics has an Earnings ESP of +1.49%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Dynamics currently carries a Zacks Rank #4 (Sell).
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks That Warrant a Look
Here are a few companies in the Zacks Aerospace Sector that have the right combination of elements to post an earnings beat this quarter.
Raytheon Company is expected to report fourth-quarter 2018 results on Jan 30. The company has an Earnings ESP of +1.78% and a Zacks Rank #3 at present.
Huntington Ingalls Industries (HII - Free Report) is expected to report fourth-quarter 2018 results on Feb 14. The company has an Earnings ESP of +7.09% and a Zacks Rank #3.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Strong Order Growth to Fuel General Dynamics (GD) Q4 Earnings
General Dynamics Corporation (GD - Free Report) is scheduled to release fourth-quarter and 2018 results on Jan 30, before the opening bell.
A steady trend of contract wins should boost General Dynamics’ revenues in the fourth quarter. Moreover, the acquisition of CSRA is likely to continue driving the company’s operational results.
Let’s take a detailed look at factors influencing General Dynamics’ quarterly results.
Robust Orders to Boost Sales
General Dynamics, being the largest military shipbuilders in the United States, enjoys a steady flow of orders from both the Pentagon and its foreign allies. Keeping up with the usual trend, the company acquired significant contracts in the fourth quarter.
These contracts include a $3.9-billion deal for the construction of four Arleigh Burke-class destroyers. Such massive order growth is likely to have a favorable impact on the company’s backlog, which should reflect in the upcoming quarterly results.
In fact, the company usually wins such contracts, which, in turn, boost its sales growth. Keeping with this trend, we can expect General Dynamics to witness solid revenue growth in the fourth quarter. In line with this, the Zacks Consensus Estimate for the company’s sales in the fourth quarter is pegged at $10.29 billion, reflecting a 24.3% year-over-year surge.
Aerospace Segment Witnesses Growth
General Dynamics’ Aerospace segment’s revenues are expected to receive solid boost in the fourth quarter, with the expected delivery of 8-10 G500s. Moreover, the segment’s Gulfstream Aerospace has been making significant progress on both cost and schedule related to the production of
nacelles, post the NORDAM Group acquisition. Deliveries of nacelles are in line to support the G500s deliveries during the reported quarter.
These developments, in turn, make us confident of possible revenue growth at this business unit. In line with this, the Zacks Consensus Estimate for the segment’s revenues in the fourth quarter is pegged at $2,689 million, reflecting a year-over-year surge of 35.7%.
CSRA Acquisition to Continue Boosting Growth
In the first week of April 2018, General Dynamics successfully completed the acquisition of CSRA Inc., an IT service provider, for $9.7 billion. Management continues to expect the buyout to increase its revenues by $3.6 billion in 2018.
As the acquisition turned out to be modestly accretive to third-quarter revenues, we expect this to be accretive to the company’s fourth-quarter revenues as well. This should aid its bottom line. Consequently, the Zacks Consensus Estimate for General Dynamics’ fourth-quarter earnings is pegged at $2.98, reflecting 19.2% annual improvement.
General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation Price and EPS Surprise | General Dynamics Corporation Quote
What the Zacks Model Unveils
Our proven model does not conclusively show that General Dynamics is likely to beat estimates in the fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.
Earnings ESP: General Dynamics has an Earnings ESP of +1.49%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Dynamics currently carries a Zacks Rank #4 (Sell).
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks That Warrant a Look
Here are a few companies in the Zacks Aerospace Sector that have the right combination of elements to post an earnings beat this quarter.
Lockheed Martin Corporation (LMT - Free Report) is expected to report fourth-quarter 2018 results on Jan 29. The company has an Earnings ESP of +4.20% and it currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Raytheon Company is expected to report fourth-quarter 2018 results on Jan 30. The company has an Earnings ESP of +1.78% and a Zacks Rank #3 at present.
Huntington Ingalls Industries (HII - Free Report) is expected to report fourth-quarter 2018 results on Feb 14. The company has an Earnings ESP of +7.09% and a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>