Stock of the Day

February 10, 2020

General Dynamics (GD)

$243.02
-$3.19 (-1.3%)
Market Cap: $66.56B

About General Dynamics

General Dynamics Corporation operates as an aerospace and defense company worldwide. It operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The Aerospace segment produces and sells business jets; and offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing, and fixed-base operator services. The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers, as well as builds crude oil and product tankers, and container and cargo ships; provides maintenance, modernization, and lifecycle support services for navy ships; offers and program management, planning, engineering, and design support services for submarine construction programs. The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles, and armaments; and offers modernization programs, engineering, support, and sustainment services. The Technologies segment provides information technology solutions and mission support services; mobile communication, computers, and command-and-control mission systems; intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers; cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations; and unmanned undersea vehicle manufacturing and assembly services. The company was founded in 1899 and is headquartered in Reston, Virginia.

General Dynamics Bull Case

Here are some ways that investors could benefit from investing in General Dynamics Co.:

  • The current stock price is around $261.96, which is near the 50-day moving average, indicating potential stability and a favorable entry point for investors.
  • General Dynamics Co. has a strong market capitalization of $65.42 billion, suggesting a solid financial foundation and the ability to invest in growth opportunities.
  • The company recently announced a quarterly dividend of $1.42 per share, translating to an annualized dividend of $5.68 and a yield of 2.35%, providing a steady income stream for investors.
  • A stock buyback plan has been approved, allowing the company to repurchase 10 million shares, which often signals that the board believes the stock is undervalued and can enhance shareholder value.
  • Analysts have a consensus rating of "Hold" with a price target of $298.59, indicating that there is potential for price appreciation in the near term.

General Dynamics Bear Case

Investors should be bearish about investing in General Dynamics Co. for these reasons:

  • The company reported earnings per share (EPS) of $4.15, which missed analysts' expectations of $4.29, raising concerns about its short-term profitability.
  • Recent analyst downgrades, including a reduction from "buy" to "neutral" by BTIG Research, suggest a lack of confidence in the stock's near-term performance.
  • The stock has a relatively high P/E ratio of 17.74, which may indicate that it is overvalued compared to its earnings, potentially deterring value-focused investors.
  • Insider selling activity, such as the sale of shares by VP Christopher J. Brady and Director Laura J. Schumacher, could signal a lack of confidence in the company's future prospects.
  • The beta of 0.61 indicates lower volatility compared to the market, which may not appeal to investors seeking high-growth opportunities.

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