Lots of Positive Headlines This Week for Defense Stocks, but Valuations Looking a Bit Stretched
There should be plenty of positive headlines for defense stocks this week ahead of President Trump’s defense budget release on May 23 and following the president's visit to Saudi Arabia, which featured $110 billion of defense deals for U.S. contractors. However, our defense coverage looks fully valued at an average price to fair value of 1.03 and an average forward EV/EBITDA of 11.5 times, well above the sector’s historical average of roughly 8.0 times. That said, we like narrow moat Raytheon fr...General Dynamics is an aerospace and defense company. The company has five operating segments: Aerospace, which provides a family of Gulfstream aircraft and services for business aircraft produced by Gulfstream and other original equipment manufacturers; Combat Systems, which provides combat vehicles, weapons systems and munitions; Information Technology, which provides information technology (IT) services, IT infrastructure modernization and professional services; Mission Systems, which provides mission-critical products and systems; and Marine Systems, which designs and builds nuclear-powered submarines, surface combatants, and auxiliary and combat-logistics ships.
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