Back to top

Image: Bigstock

General Dynamics (GD) Down 8.3% Since Last Earnings Report: Can It Rebound?

Read MoreHide Full Article

A month has gone by since the last earnings report for General Dynamics (GD - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is General Dynamics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

General Dynamics Q1 Earnings Top, Revenues Flat Y/Y

General Dynamics reported first-quarter 2022 earnings per share (EPS) of $2.61, which beat the Zacks Consensus Estimate of $2.49 by 4.8%. Quarterly earnings soared 5.2% from $2.48 per share in the year-ago quarter.

Total Revenues

General Dynamics’ first-quarter revenues of $9,392 million surpassed the Zacks Consensus Estimate of $8,977.3 million by 4.6%. Revenues remained almost flat when compared with the year-ago quarter.

Segmental Performance

Aerospace: The segment reported revenues of $1,903 million, up 0.8% year over year. Operating earnings of $243 million increased 10.5% from the prior-year quarter’s $220 million.

Marine Systems: This segment’s revenues rose 6.8% from the prior-year quarter to $2,651 million. Operating earnings were up 5.5% from the year-ago quarter to $211 million.

Technologies: The segment reported revenues of $3,163 million, which decreased 1.1% year over year. Operating earnings of $298 million dropped 2.6% from the prior-year quarter’s $306 million.

Combat Systems: The segment’s revenues of $1,675 million were down 8% from the year-ago quarter’s $1,820 million. Operating earnings also declined 7% year over year to $227 million.

Operational Highlights

For the reported quarter, GD’s operating margin contracted 30 basis points, from the year-ago quarter’s reported figure, to 9.7%.

For the quarter under review, General Dynamics’ operating costs and expenses inched up 0.4% from the year-ago period to $8,484 million.

Interest expenses for the reported quarter declined 20.3% year over year to $98 million.

Backlog

General Dynamics recorded a total backlog of $87.23 billion, down 0.4% from 2021-end’s backlog. The funded backlog at the first quarter’s end was $66.60 billion.

Financial Condition

As of Apr 3, 2022, General Dynamics’ cash and cash equivalents were $2,907 million compared with $1,603 million as of Dec 31, 2021.

Long-term debt as of Apr 3, 2022 was $10,491 million, flat compared with the 2021-end level of $10,490 million.

In the first quarter of 2022, GD generated cash from operating activities of $1,968 million, escalating sharply from the only $3 million generated in the year-ago period.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, General Dynamics has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 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.

Performance of an Industry Player

General Dynamics belongs to the Zacks Aerospace - Defense industry. Another stock from the same industry, Lockheed Martin (LMT - Free Report) , has gained 1.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Lockheed reported revenues of $14.96 billion in the last reported quarter, representing a year-over-year change of -8%. EPS of $6.44 for the same period compares with $6.56 a year ago.

Lockheed is expected to post earnings of $6.45 per share for the current quarter, representing a year-over-year change of -9.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Lockheed has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.


In-Depth Zacks Research for the Tickers Above


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


Lockheed Martin Corporation (LMT) - free report >>

General Dynamics Corporation (GD) - free report >>

Published in