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Why Is General Dynamics (GD) Up 3.3% Since the Last Earnings Report?

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It has been about a month since the last earnings report for General Dynamics Corporation (GD - Free Report) . Shares have added about 3.3% in the past month.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 catalysts.

General Dynamics Q2 Earnings In Line, ’17 View Raised

General Dynamics reported second-quarter 2017 earnings from continuing operations of $2.45 per share, which came in line with the Zacks Consensus Estimate. Reported earnings were up 6.5% from $2.30 recorded in the year-ago quarter.

Total Revenue

General Dynamics’ second-quarter total revenue of $7,675 million missed the Zacks Consensus Estimate of $7,704 million by 1.7%. Reported revenues also dipped 1.3% from $7,774 million in the year-ago quarter.

Backlog

The company recorded a total backlog of $58.6 billion, down 10% year over year. Funded backlog at the quarter end was down 5.8% to $51.7 billion.

Segment Performance

Aerospace: The segment reported revenues of $2,078 million, down 9% year over year. Operating earnings of $425 million increased 0.2% from the prior-year recorded figure of $424 million.

Combat Systems: Segment revenues rose 9% to $1,414 million. Operating earnings were up 9.8% to $225 million in the quarter.

Information Systems and Technology: The segment reported revenues of $2,104 million, down 5%. Operating income rose 2.6% to $240 million.

Marine Systems: The segment’s revenues of $2,079 million were up 5.1% from the year-ago figure of $1,978 million. Operating income also improved 3.5% to $178 million.

Operational Highlights

Company-wide operating margin expanded 60 basis points to 13.8% from the year-ago level of 13.2%.

In the quarter under review, General Dynamics’ operating costs and expenses declined 1.9% to $6,619 million.

Financial Condition

As of Jul 2, 2017, General Dynamics’ cash and cash equivalents were $1,856 million compared with $2,334 million as of Dec 31, 2016.

Long-term debt as of Jul 2, 2017 was $2,989 million, almost in line with the 2016-end level of $2,988 million.

As of Jul 2, 2017, the company’s cash flow from operating activities was around $1,010 million compared with $873 million in the year-ago period.

Free cash flow from operations at the end of the second quarter was $386 million, compared with $324 million in the previous year.

2017 Outlook

The company increased its EPS guidance for 2017 from the range of $9.50– $9.55 to of $9.70–$9.75.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, General Dynamics' stock has a subpar Growth Score of D, however its Momentum is doing a bit better with a C.  The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, stocks has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable for momentum and value based on our styles scores.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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