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Will Supply-Chain Issue Hurt General Dynamics' (GD) Q2 Earnings?
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General Dynamics Corporation (GD - Free Report) is set to release second-quarter 2023 results on Jul 26 before market open.
General Dynamics delivered an earnings surprise of 2.20% in the last four quarters, on average. The strong revenue performance across most of its business segments is likely to have accelerated its overall second-quarter top line. However, the bottom line is likely to have been impacted by foreign exchange rate fluctuations and supply-chain disruptions.
Aerospace Unit to Elevate Total Revenues
Increased global air travel demand boosting higher aircraft services, particularly in the realm of maintenance and fixed-based operator services, is likely to have contributed to the Aerospace business unit’s sales performance.
The Zacks Consensus Estimate for the Aerospace segment’s revenues in the second quarter is pegged at $2,083.2 million. This indicates an 11.6% improvement from revenues reported in the year-ago quarter.
Marine Systems Likely to be Weak
The Marine Systems unit’s revenues are likely to have been positively influenced by the increased volume from the Columbia-class submarine program, the Arleigh Burke-class (DDG-51) destroyer program and the T-AO program in the soon-to-be-reported quarter. However, the supply-chain constraints of the Virginia program are likely to dent this segment’s second-quarter results.
The Zacks Consensus Estimate for the Marine segment’s revenues in the second quarter is pegged at $2,573.6 million. This suggests a 2.9% decline from revenues reported in the year-ago quarter.
Combat Systems Sales May Rise
Increased revenues from the Mobile Protected Firepower ramp-up, Stryker SHORAD and new international vehicle programs for Poland and Australia are likely to have added impetus to Combat Systems’ second-quarter revenues. The strong demand for munitions and international combat vehicles must have kept order numbers elevated, thereby boosting the backlog for this segment in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for the Combat Systems segment’s revenues in the second quarter is pegged at $1,689.7 million. This indicates a 1.4% increase from revenues reported in the year-ago quarter.
Technologies Unit’s Revenues Likely to Improve
Strong order activity in IT services and higher hardware volumes are likely to have contributed to the Technologies unit’s revenues in the second quarter of 2023.
The Zacks Consensus Estimate for the Technologies segment’s revenues in the second quarter is pegged at $3,103.1 million. This calls for 3.3% growth from revenues reported in the year-ago quarter.
Backlog Shows Strength
A strong backlog indicates positive prospects for a company. In this context, our model suggests a growth rate of 4.1% for GD’s backlog in the second quarter of 2023, indicating high demand for General Dynamics’ products and services.
Other Factors to Note
The growth in sales across the majority of the company’s segments makes us optimistic about the overall top line in the second quarter. However, this may have been offset by foreign exchange rate fluctuations and supply-chain disruptions, thus negatively impacting the bottom line of General Dynamics in the soon-to-be-reported quarter.
Q2 Estimates
The Zacks Consensus Estimate for second-quarter revenues is pegged at $9.41 billion, suggesting 2.4% growth from the year-ago quarter.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.59 per share, indicating a decline of 5.8% from the prior-year reported figure.
General Dynamics Corporation Price and EPS Surprise
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 ESP and 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 -2.56% 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:
The Zacks Consensus Estimate for Embraer’s second-quarter earnings, pegged at 12 cents per share, indicates a decline of 42.9% from the prior-year reported figure. The Zacks Consensus Estimate for ERJ’s sales suggests a growth rate of 14.3% from the prior-year reported figure.
Huntington Ingalls Industries (HII - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3. HII delivered a four-quarter average earnings surprise of 8.09%.
The Zacks Consensus Estimate for HII’s second-quarter sales is pegged at $2.73 billion, suggesting a growth rate of 2.5% from the prior-year reported figure. The Zacks Consensus Estimate for its second-quarter earnings implies a decline of 29.3% from the prior-year reported figure.
L3Harris Technologies (LHX - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3. LHX delivered a four-quarter average negative earnings surprise of 0.37%.
The Zacks Consensus Estimate for LHX’s second-quarter sales is pegged at $4.34 billion, suggesting a growth rate of 4.9% from the prior-year reported figure. The Zacks Consensus Estimate for its second-quarter earnings stands at $2.91 per share.
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Will Supply-Chain Issue Hurt General Dynamics' (GD) Q2 Earnings?
General Dynamics Corporation (GD - Free Report) is set to release second-quarter 2023 results on Jul 26 before market open.
General Dynamics delivered an earnings surprise of 2.20% in the last four quarters, on average. The strong revenue performance across most of its business segments is likely to have accelerated its overall second-quarter top line. However, the bottom line is likely to have been impacted by foreign exchange rate fluctuations and supply-chain disruptions.
Aerospace Unit to Elevate Total Revenues
Increased global air travel demand boosting higher aircraft services, particularly in the realm of maintenance and fixed-based operator services, is likely to have contributed to the Aerospace business unit’s sales performance.
The Zacks Consensus Estimate for the Aerospace segment’s revenues in the second quarter is pegged at $2,083.2 million. This indicates an 11.6% improvement from revenues reported in the year-ago quarter.
Marine Systems Likely to be Weak
The Marine Systems unit’s revenues are likely to have been positively influenced by the increased volume from the Columbia-class submarine program, the Arleigh Burke-class (DDG-51) destroyer program and the T-AO program in the soon-to-be-reported quarter. However, the supply-chain constraints of the Virginia program are likely to dent this segment’s second-quarter results.
The Zacks Consensus Estimate for the Marine segment’s revenues in the second quarter is pegged at $2,573.6 million. This suggests a 2.9% decline from revenues reported in the year-ago quarter.
Combat Systems Sales May Rise
Increased revenues from the Mobile Protected Firepower ramp-up, Stryker SHORAD and new international vehicle programs for Poland and Australia are likely to have added impetus to Combat Systems’ second-quarter revenues. The strong demand for munitions and international combat vehicles must have kept order numbers elevated, thereby boosting the backlog for this segment in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for the Combat Systems segment’s revenues in the second quarter is pegged at $1,689.7 million. This indicates a 1.4% increase from revenues reported in the year-ago quarter.
Technologies Unit’s Revenues Likely to Improve
Strong order activity in IT services and higher hardware volumes are likely to have contributed to the Technologies unit’s revenues in the second quarter of 2023.
The Zacks Consensus Estimate for the Technologies segment’s revenues in the second quarter is pegged at $3,103.1 million. This calls for 3.3% growth from revenues reported in the year-ago quarter.
Backlog Shows Strength
A strong backlog indicates positive prospects for a company. In this context, our model suggests a growth rate of 4.1% for GD’s backlog in the second quarter of 2023, indicating high demand for General Dynamics’ products and services.
Other Factors to Note
The growth in sales across the majority of the company’s segments makes us optimistic about the overall top line in the second quarter. However, this may have been offset by foreign exchange rate fluctuations and supply-chain disruptions, thus negatively impacting the bottom line of General Dynamics in the soon-to-be-reported quarter.
Q2 Estimates
The Zacks Consensus Estimate for second-quarter revenues is pegged at $9.41 billion, suggesting 2.4% growth from the year-ago quarter.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.59 per share, indicating a decline of 5.8% from the prior-year reported figure.
General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation price-eps-surprise | General Dynamics Corporation Quote
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 ESP and 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 -2.56% 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:
Embraer S.A. (ERJ - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #3. The long-term earnings growth rate of ERJ is 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Embraer’s second-quarter earnings, pegged at 12 cents per share, indicates a decline of 42.9% from the prior-year reported figure. The Zacks Consensus Estimate for ERJ’s sales suggests a growth rate of 14.3% from the prior-year reported figure.
Huntington Ingalls Industries (HII - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3. HII delivered a four-quarter average earnings surprise of 8.09%.
The Zacks Consensus Estimate for HII’s second-quarter sales is pegged at $2.73 billion, suggesting a growth rate of 2.5% from the prior-year reported figure. The Zacks Consensus Estimate for its second-quarter earnings implies a decline of 29.3% from the prior-year reported figure.
L3Harris Technologies (LHX - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3. LHX delivered a four-quarter average negative earnings surprise of 0.37%.
The Zacks Consensus Estimate for LHX’s second-quarter sales is pegged at $4.34 billion, suggesting a growth rate of 4.9% from the prior-year reported figure. The Zacks Consensus Estimate for its second-quarter earnings stands at $2.91 per share.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.