General Dynamics Corp (GD)
Fair ValueFundamental
71
Price
$331.83
Market Cap
$90.41B
Part 1 · What the company is worth
Overview
General Dynamics is a US aerospace and defense company built from four fairly different businesses under one roof. It designs and builds Gulfstream business jets and services them worldwide; it builds nuclear-powered submarines (Virginia-class and Columbia-class) and Navy surface ships at its shipyards; it makes armored military vehicles, weapon systems and ammunition; and it sells IT services, cyber and communications systems, mostly to US federal agencies and the military. In fiscal 2025 the group reported revenue of $52.6 billion and ended the year with a backlog of about $118 billion, the bulk of it multi-year Navy shipbuilding work.
How it makes money
Most of the revenue comes from long-term contracts with the US government, recognised as the work is performed rather than when a cheque arrives. Shipbuilding and much defence work runs on cost-reimbursable or incentive contracts, where the customer covers allowable costs and pays a fee; fixed-price contracts, common elsewhere in the group, pay an agreed amount whatever the cost turns out to be, so overruns come out of the company's own margin. The Aerospace segment is different: Gulfstream sells aircraft outright, taking deposits and recognising the sale on delivery, and then earns a long recurring stream from maintenance, parts and completions on the installed fleet. In 2025 the US government accounted for about 68% of revenue, US commercial customers 15%, non-US government 8% and non-US commercial 9%.
Revenue by segment
Designs and builds nuclear-powered submarines, destroyers and auxiliary ships for the US Navy, plus repair and lifecycle services. In 2025 submarines accounted for $12.6 billion of the segment's revenue, surface ships $2.9 billion and repair and other services $1.2 billion.
IT services and mission systems — cloud, cybersecurity, networks and C5ISR equipment — sold mainly to US federal civilian agencies, the intelligence community and the armed forces.
Gulfstream business jets sold to companies, wealthy individuals and governments, plus worldwide maintenance and completion services. In 2025 aircraft manufacturing was $9.4 billion of segment revenue and aircraft services $3.7 billion.
Armoured vehicles, weapon systems and ammunition for the US Army and allied armed forces, with engineering and support services attached. In 2025 military vehicles were $5.0 billion, weapon systems and munitions $3.1 billion and engineering and other services $1.2 billion.
Competitive moat
Patents and licences · WideThe hardest part to copy is not the factories but the permissions and the position. Electric Boat and Bath Iron Works are among the very few yards in the world qualified to build nuclear-powered submarines and Navy combatants, work that requires facilities, cleared workers and a decades-long track record no newcomer can assemble; the Columbia and Virginia programmes are effectively sole-source and stretch into the 2030s. Gulfstream's advantage is different: a brand in the top tier of business aviation, a certified product line and a global service network that keeps owners inside the fleet. Technologies and Combat Systems are more contestable, won and lost on competitive bids.
What drives demand
Moderately cyclicalThree quarters of the company moves with government budgets rather than with the economy: submarines, destroyers, armoured vehicles and federal IT are funded years in advance, and the $118 billion backlog means much of the next decade's Marine Systems work is already ordered. That part behaves defensively, though it is exposed to a political cycle instead of an economic one — a change in defence priorities or a budget standoff, not a recession, is what moves it. The Aerospace segment is the cyclical quarter: business-jet orders follow corporate profits, credit conditions and confidence, and they can stall quickly when those turn.
Key risks
- Dependence on US government budgets — About two-thirds of revenue comes from the US government, so the business is tied to annual appropriations. If the budget is not approved before the government's fiscal year begins, agencies can shut down or run under a continuing resolution, which holds up funding for programmes and delays new awards. Revenue on existing multi-year contracts depends on Congress continuing to appropriate the money.
- Contract estimates and fixed-price exposure — Profit is booked against estimates of labour productivity, complexity, material costs and delivery timing made years in advance. If those estimates change or unexpected costs appear, the profitability of one or more contracts suffers. Fixed-price contracts carry a higher fee precisely because the company absorbs cost overruns within its control.
- Supply chain and supplier performance — The company relies on specialised suppliers and subcontractors, including for critical aircraft parts and submarine components. Shortages or a supplier failing to perform delay deliveries and raise costs, and on fixed-price work those costs are not passed on to the customer.
- Availability of skilled and cleared labour — Shipbuilding and classified work need welders, engineers and cleared personnel who cannot be hired quickly. Where demand for these people exceeds supply, the company faces higher pay, recruiting and training costs, and an ageing workforce or high turnover can push out schedules.
- Aerospace demand and economic conditions — Gulfstream's results depend on general economic conditions, the availability of credit, pricing pressure and trends in capital goods markets — buyers of a business jet can postpone the decision in a way a navy cannot postpone a submarine.
- International business, export controls and geopolitics — Sales outside the United States are subject to export licences, procurement rules and political sensitivities, and geopolitical instability — including the effects of the war in Ukraine — can disrupt operations and supply while also restricting what can be shipped where.
- Cybersecurity and protection of classified information — The company handles classified programmes and sensitive customer data. A breach of its systems or of a supplier's would affect operations, customer relationships and compliance with government security obligations.
Customer concentration
Top customers account for 68% of revenue
In 2025 about 68% of revenue came from a single customer, the US government, across the Department of Defense and federal civilian agencies; US commercial customers were 15%, non-US governments 8% and non-US commercial customers 9%. Concentration on one buyer this heavy is normal for a prime defence contractor, but it means the same counterparty sets volumes, prices and payment terms across most of the group.
The case for
Buyers argue that the order book removes most of the guesswork: a backlog of roughly $118 billion at the end of 2025, with the Columbia and Virginia submarine programmes running into the 2030s, means the revenue is already contracted and the yards are effectively irreplaceable. They point to 2025 as evidence the machine is working — revenue up 10.1% to $52.6 billion with growth in all four segments, and earnings per share up 13.4% — and to Gulfstream, where the G700 ramp and the new G800 lifted Aerospace revenue 16.5%. They also like the shape of the company: a defence base that pays regardless of the economy, a business-jet franchise with a long service tail, and cash flow that has historically gone back to shareholders through dividends and buybacks.
The case against
Sellers fear that a backlog is not the same as delivered profit. The shipyards have to hire and train thousands of skilled workers and pull components through a strained supply chain; every month of schedule slippage on fixed-price and incentive work comes out of the margin rather than the customer's pocket, and the profit already booked rests on cost estimates made years earlier. They also point to the single-customer problem: with roughly 68% of revenue from the US government, a shutdown, a continuing resolution or a shift in defence priorities hits the whole group at once, and there is no commercial market to absorb the slack. And they note that the fastest-growing piece, Gulfstream, is the one most exposed to a downturn — business-jet orders can dry up while the shipyards keep building.
Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users
Direct competitors
Who this company fights with for the same customers
Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users
Its Newport News and Ingalls yards are the only other U.S. shipbuilder bidding for the same Navy submarine, destroyer and amphibious ship contracts that General Dynamics' Electric Boat and Bath Iron Works pursue.
It bids for the same U.S. federal IT, C4ISR and mission-support services contracts that make up General Dynamics' Technologies segment.
It competes for the same U.S. Department of Defense budget in weapons, munitions and defence electronics, and for the same mission-systems work.
Its Global family goes head to head with Gulfstream's large-cabin and ultra-long-range business jets for the same corporate and high-net-worth buyers worldwide.
Its Falcon line competes with Gulfstream in the long-range business jet segment, and its combat aircraft business chases the same European and export defence budgets.
It builds armoured vehicles, artillery and munitions for the U.S. Army and NATO armies, the same programmes General Dynamics' Combat Systems segment bids for.
Balance Sheet & Liquidity
Revenue
$53.81B
Trailing 12 months (through 4/5/2026)
Net Income
$4.34B
Trailing 12 months (through 4/5/2026)
Free Cash Flow
$3.96B
Total Equity
$25.62B
Total Liabilities
$31.63B
Current Ratio
1.38
Interest Coverage
18.73
Debt/EBITDA
1.57
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$351.00
Current Price
$331.83
Margin of Safety
+5.5%
Fair Value Range
$288.36 - $413.65
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
20.88
ROE
16.4%
P/B Ratio
3.44
P/FCF
14.47
Gross Margin
-
ROIC
10.8%
Profitability Radar
Value Creation (Economic Moat)
ROIC
10.8%
WACC
7.5%
ROIC − WACC
+3.4 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (20)
- EPS shows upward trend
- EPS CAGR 6.37%
- Price CAGR 7.50%
- ROIC 10.8%
- P/FCF 14.47
- Debt/Equity ratio
- Operating Margin 10.2%
- Positive Free Cash Flow
- CapEx intensity
- Current Ratio
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- ROE 17.4%
- Revenue Growth 5Y 6.7%
- Analyst Consensus 67% Buy
- Earnings Surprise avg 3.1%
- Earnings Quality (OCF/NI) 1.71
- Share Dilution -1.8%
- Piotroski F-Score 8/9
Failed (6)
- P/B Ratio 3.44
- Low reliance on intangibles
- Price below Graham Number
- DCF valuation (Overvalued)
- PEG Ratio 2.87
- Net Margin Trend 8.1% vs 8.1%
Unavailable (2)
- Gross Margin NaN%
- Dividend Payout NaN%
Piotroski F-Score
Strong financial health
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Ms. Phebe N. Novakovic | Chairperson & CEO | 67 |
| Mr. Danny Deep | President & Director | 55 |
| Ms. Kimberly A. Kuryea | Senior VP & CFO | 58 |
| Mr. Mark L. Burns | Executive Vice President | 65 |
| Mr. Jason W. Aiken CPA | Executive Vice President of Combat & Mission Systems | 53 |
| Nicole M. Shelton | Vice President of Investor Relations | - |
| Mr. Gregory S. Gallopoulos | Senior VP, General Counsel & Secretary | 65 |
| Ms. Marguerite Amy Gilliland | Executive Vice President | 50 |
| Mr. Robert E. Smith | Executive Vice President of Marine Systems | 56 |
| Mr. Shane A. Berg | Senior Vice President of External Affairs | 53 |
Audit Risk
7
Board Risk
4
Compensation Risk
3
Shareholder Rights Risk
3
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-01-30
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-07-29
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-08-07
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for GD, sourced from Markets Gazette.
- 6/1/2026POSITIVEGeneral Dynamics Will Spend $200 Million to Reboot Ammo Plant
General Dynamics is injecting $200 million of its capital to revitalize its Texas-based artillery shell production facility. The company is also dissolving its partnership with Turkish firm Repkon to overcome persistent delays. This significant investment aims to finally commence the production of 155mm artillery shells. For investors, this move signals a strong commitment to resolving production bottlenecks and meeting demand, potentially boosting future revenue streams and defense segment performance.
- 3/17/2026NEUTRALHere's How Much $1000 Invested In General Dynamics 5 Years Ago Would Be Worth Today
An investment of $1000 in General Dynamics Corporation five years ago would be worth approximately $2,700 today, reflecting a compound annual growth rate of about 22%. This performance significantly outpaced the broader market, indicating strong investor returns. The company's consistent growth trajectory suggests effective strategic execution and favorable market conditions within the defense sector. Investors considering General Dynamics should note its historical performance as a potential indicator of future returns, though past results do not guarantee future outcomes.
- 3/17/2026POSITIVE2 Defense Stocks to Buy in March
General Dynamics Corporation is poised for growth driven by increasing global defense spending. The company, a key player in the defense sector, is expected to benefit from heightened geopolitical tensions and a subsequent rise in military budgets worldwide. This trend suggests a favorable outlook for defense contractors as governments prioritize national security investments. Investors looking to capitalize on this sector-wide expansion may find General Dynamics an attractive option due to its established position and diverse portfolio of defense products and services.
- 2/24/2026POSITIVECanada Greenlights All Gulfstream Jets After Trump Threats
Canada has finally certified all Gulfstream private jet models, resolving a trade dispute that saw former US President Donald Trump threaten tariffs and retaliatory measures. This move eliminates a significant regulatory hurdle for General Dynamics, Gulfstream's parent company, ensuring full access to the Canadian market for its luxury aircraft. The decision, which follows political pressure, is positive news for investors as it removes uncertainty and the risk of potential trade sanctions that could have negatively impacted the sales and profitability of the company's aerospace segment. Full approval strengthens Gulfstream's market position in a key geographical area.
via Markets Gazette