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General Dynamics (GD) Up 3.1% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for General Dynamics CorporationGD . Shares have added about 3.1% in that time frame, outperforming the market.

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 its most recent earnings report in order to get a better handle on the important catalysts.

General Dynamics Beats on Q1 Earnings, Backlog Drops

General Dynamics reported first-quarter 2017 earnings from continuing operations of $ 2.48 per share, beating the Zacks Consensus Estimate of $ 2.32 by 6.9%. Reported earnings were also up 19.2% from $ 2.08 recorded in the year-ago quarter.

Total Revenue

General Dynamics’ first-quarter total revenue of $ 7,441 million missed the Zacks Consensus Estimate of $ 7,595 million by 2%. Reported revenues, also dipped 0.5% from $ 7,476 million in the year-ago quarter.

Backlog

The company recorded a total backlog of $ 60.4 billion, down 9.4% year over year. Funded backlog at the quarter end was down 6% to $ 53.3 billion.

Segment Performance

Aerospace : The segment reported revenues of $ 2,074 million, up 16.5% year over year. Operating earnings of $ 443 million increased from the prior-year recorded figure of $ 332 million.

Combat Systems : Segment revenues rose 3.4% to $ 1,287 million. Operating earnings were up 9.6% to $ 205 million in the quarter.

Information Systems and Technology : The segment reported revenues of $ 2,146 million, down 7.8%. Operating income dipped 0.4% to $ 236 million.

Marine Systems : The segment’s revenues of $ 1,934 million were down 8.9% from the year-ago figure of $ 2,122 million. Operating income also declined 12.5% to $ 161 million.

Operational Highlights

Company-wide operating margin expanded 150 basis points to 13.9% from the year-ago level of 12.4%.

In the quarter under review, General Dynamics’ operating costs and expenses declined 2.2% to $ 6,406 million.

Financial Condition

As of Apr 2, 2017, General Dynamics’ cash and cash equivalents were $ 2,168 million, compared with $ 1,907 million as of Apr 3, 2016.

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

As of Apr 2, 2017, the company’s cash flow from operating activities was around $ 533 million, compared with $ 480 million in the year-ago period. Free cash flow from operations at the end of the first quarter was $ 471 million, compared with $ 415 million in the previous year.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter.

General Dynamics Corporation Price and Consensus

General Dynamics Corporation Price and Consensus | General Dynamics Corporation Quote

VGM Scores

At this time, the stock has a nice score of ‘B’ on both growth and momentum front. Following a similar course, the stock was allocated a grade of ‘C’ on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of ‘B’. If you aren’t focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for growth and momentum investors than those looking for value.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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