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Will Solid Segment Sales Aid General Dynamics (GD) Q2 Earnings?

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General Dynamics Corporation (GD - Free Report) is set to release second-quarter 2022 results on Jul 27 before market open.

General Dynamics delivered an earnings surprise of 3.09% in the last four quarters, on average. The strong growth in revenues across most of its business segments is likely to positively impact its second-quarter results, while increased expenses might have partially hurt the bottom line.

Aircraft Services to Boost Aerospace Unit Performance

General Dynamics’ Aerospace business unit is projected to benefit from increased air travel, which is likely to have boosted the demand for maintenance work and activity at its fixed-base operator facilities. However, the second-quarter revenue performance of the segment is likely to have been adversely impacted by lower delivery rates.

The Zacks Consensus Estimate for the Aerospace segment’s revenues in the second quarter is pegged at $1,847 million, indicating a 13.9% improvement from revenues reported in the year-ago quarter.

Marine Systems – Another Growth Driver

Marine Systems can be expected to deliver an improved top line in the soon-to-be-reported quarter, buoyed by the increased demand for shipbuilding from the U.S. Navy. In particular, the construction and repair volume for ships is likely to boost this segment’s second-quarter results.

The Zacks Consensus Estimate for the Marine segment’s revenues in the second quarter is pegged at $2,617 million, indicating a 3.2% increase from revenues reported in the year-ago quarter.

Lower Demand to Hit Combat Systems

Lower revenues from international military vehicles, weapon systems and munitions are likely to have dented the revenue performance of Combat Systems.

The Zacks Consensus Estimate for the Combat Systems segment’s revenues in the second quarter is pegged at $1,763.7 million, indicating a 7.1% decline from revenues reported in the year-ago quarter.

IT Services to Contribute to Technologies Unit Revenues

Revenues from increased IT services might have acted as a catalyst for the unit’s revenue performance in the soon-to-be-reported quarter. However, supply-chain shortages and delays in customer order activity might have impacted revenues from C5ISR solutions, thus partially damping the performance of revenues from this segment in the second quarter.

Other Factors to Note

The strong growth expected in revenues from the majority of its segments makes us optimistic about GD’s overall top line in the second quarter. This, in turn, is likely to have contributed to the bottom line of the company in the soon-to-be-reported quarter. However, the increased corporate expense and the accelerated equity compensation plan are likely to have partially impacted General Dynamics’ soon-to-be-reported quarterly earnings.

Second-Quarter Estimates

The Zacks Consensus Estimate for second-quarter revenues is pegged at $9.39 billion, suggesting growth of 1.8% from the year-ago quarter.

The Zacks Consensus Estimate for second-quarter earningsis pegged at $2.72 per share, indicating growth of 4.2% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for General Dynamics this time. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. However, that is not the case here as given below.

General Dynamics has an Earnings ESP of -0.37% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few defense companies that you may want to consider as these have the right combination of elements to post an earnings beat this season:

Spire Global, Inc. (SPIR - Free Report) has an Earnings ESP of +9.43% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Spire delivered an earnings surprise of 7.7% in the last reported quarter. The Zacks Consensus Estimate for SPIR’s second-quarter sales and earnings is pegged at $18.93 billion.

L3Harris Technologies, Inc. (LHX - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank #3. It has a four-quarter average earnings surprise of 2.32%.

The long-term earnings growth rate of LHX stands at 4.4%. In the last reported quarter, the company delivered an earnings surprise of 3.31%.

CAE (CAE - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #3. CAE delivered a four-quarter average earnings surprise of 7.67%.

The long-term earnings growth rate of CAE is pegged at 16.9%. The Zacks Consensus Estimate for CAE’s second-quarter earnings is pegged at 18 cents per share, suggesting growth of 20% from the prior-year reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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