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General Dynamics Corp

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General Dynamics Corp AI Insights

Informational only. Not investment advice.
As of 2025-12-08

Snapshot

  • Goodwill of 20.9B is 85% of equity (24.4B) - acquisition-heavy model creates material impairment risk if defense budgets contract[Goodwill]
  • ROE TTM 17.8% vs industry median 2.1% with ROIC 12.3% - capital efficiency 8x peers despite capital-intensive business[ROE TTM]
  • Revenue growth 10.6% TTM outpacing industry median near 0% while maintaining 10.3% operating margin vs 3.6% median[Total Revenue 1Y Growth]

Watch Triggers

  • Free Cash Flow TTM: Falls below 4.0B or FCF/Net Income drops under 100% — Current 114% FCF conversion funds dividends; deterioration signals working capital issues
  • Goodwill: Any impairment charge or goodwill exceeds 90% of equity — At 85% of equity, even 10% impairment wipes 2B from book value
  • Operating Margin TTM: Drops below 9% (from current 10.3%) — Fixed-price contracts mean margin compression signals execution problems

Bull Case

Defense prime with 51.5B TTM revenue growing 10.6% - scale advantage in consolidated industry with high barriers to entry and long-cycle contracts

Total Revenue TTMTotal Revenue 1Y Growth

Capital returns machine: 4.8B FCF funds 5.92 dividend (2.7% yield) plus buybacks with only 0.40 debt/equity

Free Cash Flow TTMDividends Paid Per Share TTMDebt to Equity

Bear Case

Tangible book value only 2.2B vs 91.6B market cap - P/TBV of 42x means you're paying for goodwill that could impair

Tangible Book ValueP/B RatioGoodwill

Inventory of 9.8B (19% of assets) ties up working capital; supply chain or program delays could pressure cash conversion

InventoryWorking Capital

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
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Forward Thesis

FCF conversion to sustain 5.9 dividend + buybacks as defense spending remains elevated through 2027

1-3yhigh
  • FCF TTM 4.8B on 51.5B revenue = 9.3% FCF margin
  • Debt/equity 0.40 provides capacity for capital returns
  • Backlog visibility from multi-year defense contracts
FCF TTM 4.8B vs capex 907M = 5.3x coverageDividend payout 38% of earnings (sustainable)Net debt 5.5B vs EBITDA 6.4B = 0.9x leverage
Valuation Context
Caveats

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