January 5, 2018

GD – Market expectations are for record-high Uniform ROA, but management has concerns about the G500, growth, and margins


  • General Dynamics Corporation (GD:USA)¬†currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.4x Uniform P/E, implying bullish expectations for the firm. However, management appears concerned about the G500, margins, and growth
  • Specifically, management appears concerned about the continued declines in revenue and may be exaggerating their optimism regarding order intake in Q4. Moreover, they may be downplaying concerns about the potential delays in the G500, and may have concerns about the potential declines in margins going forward
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