A Powerful Quarter for General Dynamics

by: Zacks.com December 04, 2008 | about stocks: GD    

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General Dynamics Corp. (GD) reported third-quarter results in late October. Earnings per share of $1.59 topped the year-prior $1.34 and exceeded analyst estimates by 7%. Revenues jumped 4.5% to $7.1 billion on a year-over-year basis.

Company Description

General Dynamics operates in four main business segments. Aerospace designs, which develops, manufacturers and services a comprehensive offering of advanced business-jet aircraft. Combat Systems is a global leader in producing, supporting and sustaining land and expeditionary combat systems for the U.S. military and its allies. Marine Systems designs, builds and supports submarines and a variety of surface ships for the U.S. Navy and commercial customers. The Information Systems and Technology group offers a breadth and depth of technology and service capabilities that support a wide range of government and commercial needs, including systems integration expertise; hardware and software products; and engineering, management and support services.

A Recent Contract

A subsidiary of General Dynamics, Bath Iron Works, received an additional $45.8 million contract from the Navy for servicing the Zumwalt class destroyer program.

Rising Estimates

Analysts have earnings pegged at $6.18 per share for the 2008 year, up from last month’s $6.15. For the following year, Wall Street is forecasting $6.80 per share, an increase from last month’s $6.76. The most accurate projections are $6.20 per share for 2008 and $6.81 for 2009.

A Solid Quarter

Management said sales in the third quarter increased in the Aerospace, Marine Systems and Information Systems and Technology groups when compared to the year-ago period, adding that the company saw substantial backlog growth in Combat Systems.

Company Chairman and Chief Executive Officer Nicholas D. Chabraja said:

This was a powerful quarter for General Dynamics. As the company’s core defense programs demonstrated their continued strength and the market for business-jet aircraft drove the Aerospace backlog to its highest level ever, we improved margins company-wide and generated substantial cash by maintaining our focus on solid execution.

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