March 7, 2018

GD – Market expectations are for record-high Uniform ROA, but management has concerns about revenue, growth, and demand


      • General Dynamics Corporation (GD:USA)¬†currently trades near historical lows relative to UAFRS-based (Uniform) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.1x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about revenue, growth, and demand
      • Specifically, management may have concerns about the sustainability of their revenue and operating earnings growth, and may also lack confidence in the sustainability of order intake improvements in their Aerospace segment. Additionally, they may have concerns about their ability to continue growing revenues in their Combat Systems segment, and may be concerned about declining performance in their Marine segment. Furthermore, they may be exaggerating the demand they are seeing from the Navy, and may have concerns about slow revenue generation from their IS&T backlog
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