June 7, 2018

GD – Market expectations are for Uniform ROA expansion, but management has concerns about their backlog, Marine Systems segment, and the G650


 

  • General Dynamics Corporation (GD:USA)currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.3x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their backlog, Marine Systems segment, and the G650
  • Specifically, management may lack confidence in the sustainability of strong interest in North America and a growing opportunity set in Europe, and may be concerned about declining funded backlog in their Combat Systems business. Additionally, they may have concerns about their Marine Systems products, and may lack confidence in their ability to meet their delivery forecast given the delay they’ve seen in their G650 certification

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