It has been about a month since the last earnings report for General Dynamics (GD Quick QuoteGD - Free Report) . Shares have lost about 7.1% 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' Q3 Earnings Lag Estimates, Revenues Rise Y/Y

General Dynamics Corporation reported third-quarter 2024 earnings per share (EPS) of $3.35, which missed the Zacks Consensus Estimate of $3.54 by 5.4%. However, the bottom-line increased 10.2% from $3.04 per share recorded in the year-ago quarter.

The year-over-year bottom-line appreciation can be attributed to sales growth as well as an improvement in operating earnings.

Total Revenues of GD

Revenues of $11.67 billion missed the Zacks Consensus Estimate of $11.72 billion by 0.4%. The top line however improved 10.4% from the prior-year figure.

The year-over-year improvement can be attributed to increased revenues from GD’s Aerospace, Marine Systems and Technologies, business segments.

GD’s Segmental Performance

Aerospace: The segment reported revenues of $2.48 billion, up 22.1% year over year. Operating earnings of $305 million improved 13.8% year over year.

Marine Systems: This segment’s revenues rose 19.9% to $3.60 billion from the year-ago quarter’s level. Operating earnings of $258 million increased 22.3% year over year.

Technologies: The segment’s revenues improved 2% year over year to $3.38 billion. Operating earnings totaled $326 million, which improved 3.5% year over year.

Combat Systems: The segment’s revenues of $2.21 billion were down 0.5% from the year-ago quarter’s level. However, operating earnings improved 8.3% year over year to $325 million.

Operational Highlights of GD

Operating earnings totaled $1.18 billion, up 11.7% from the year-ago quarter’s $1.06 billion.

Operating costs and expenses increased 10.3% year over year to $10.49 billion.

Interest expenses declined 3.5% year over year to $82 million.

GD’s Backlog

General Dynamics recorded a total backlog of $92.63 billion, surpassing the second-quarter level of $91.30 billion. The funded backlog at the end of the quarter was $74.95 billion.

Our model projected a backlog of $93.08 billion for the third quarter.

Financial Condition of GD

As of Sept. 29, 2024, cash and cash equivalents totaled $2.10 billion compared with $1.91 billion as of Dec. 31, 2023.

The long-term debt as of the same date was $7.26 billion, down from the 2023-end level of $8.75 billion.

During the first nine months of 2024, cash flow from operating activities totaled $1.95 billion compared with $3.51 billion in the year-ago period.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, General Dynamics has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 C. 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.