GD - Embedded Expectations Analysis - 2019 06 18
General Dynamics Corporation (GD:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 21.7x Uniform P/E. At these levels, markets have muted expectations for the firm, and management may be concerned about Aerospace and IT margins, Mission Systems and IT earnings growth, and the quality of their defense products.Specifically, management may lack confidence in their ability to improve Aerospace and IT margins, manage capex and legal costs, and sustain growth in their backlog, Mission Systems earnings, and IT earnings. In addition, they may be concerned about the progress of their CSRA integration, GDIT's book-to-bill ratio, and the logistics required to transport the Columbia and Block V modules. Finally, they may be exaggerating the quality of the Nacelle, G650 aircraft, and Abrams tank, and may be concerned about their ability to offset employee stock option share dilution.
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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