A month has gone by since the last earnings report for General Dynamics (GD Quick QuoteGD - Free Report) . Shares have added about 4.7% in that time frame, outperforming 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' Q4 Earnings Beat Estimates, Sales Lag

General Dynamics reported fourth-quarter 2021 earnings from continuing operations of $3.39 per share, which beat the Zacks Consensus Estimate of $3.37 by 0.6%. Quarterly earnings declined 2.9% from $3.49 per share in the year-ago quarter.

General Dynamics’ 2021 earnings were $11.55 per share, up 5% year over year due to strong performance of defense segments.

Total Revenues

General Dynamics’ fourth-quarter revenues of $10,292 million missed the Zacks Consensus Estimate of $10,701 million by 3.8%. Revenues also declined 1.8% from $10,481 million in the year-ago quarter.

Segmental Performance

Aerospace:The segment reported revenues of $2,560 million, up 5.1% year over year. Yet, operating earnings of $354 million deteriorated 11.7% from the prior-year quarter’s $401 million.

Marine Systems:Segment revenues rose 0.5% from the prior-year quarter to $2,870 million. Yet, operating earnings were down 4.9% from the year-ago quarter to $235 million.

Technologies:The segment reported revenues of $2,975 million, which decreased 7.9% year over year. Operating earnings of $334 million dropped 5.1% from the prior-year quarter’s $352 million.

Combat Systems:The segment’s revenues of $1,887 million were down 3.7% from the year-ago quarter’s $1,960 million. Operating earnings also declined 9.1% year over year to $281 million.

Operational Highlights

For the reported quarter, General Dynamics’ operating margin declined 80 basis points (bps) from the year-ago reported figure to 11.5%.

For the quarter under review, General Dynamics’ operating costs and expenses decreased 0.9% from the year-ago period to $9,106 million.

Interest expenses for the reported quarter declined 22.5% year over year to $93 million.

Backlog

General Dynamics recorded a total backlog of $87.6 billion, down 2.1% year over year. The funded backlog at fourth quarter-end was $61.1 billion.

Financial Condition

As of Dec 31, 2021, General Dynamics’ cash and cash equivalents were $1,603 million compared with $2,824 million in the corresponding period of 2020.

Long-term debt as of Dec 31, 2021 was $10,490 million, which escalated from the 2020-end level of $9,995 million.

In 2021, the company generated cash from operating activities of $4,271 million compared with $3,858 million generated in the year-ago period.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

The consensus estimate has shifted -10.94% due to these changes.

VGM Scores

At this time, General Dynamics has a strong 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 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

General Dynamics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.