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RBC raises General Dynamics stock target on strong segment growth

EditorNatashya Angelica
Published 24/10/2024, 11:42 pm
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On Thursday, RBC Capital Markets adjusted its outlook for General Dynamics Corp. (NYSE: GD), increasing the price target to $330 from $320, while keeping an Outperform rating on the stock.

The revision follows General Dynamics' third-quarter earnings release, which showcased a per-share profit of $3.35. This figure surpassed RBC Capital's prediction of $3.27 but fell short of the broader market consensus, largely due to fewer deliveries of the G700 aircraft than anticipated.

General Dynamics reported a robust 10% growth in total revenue for the quarter, propelled by significant gains in the Aerospace and Marine divisions.

The company's Aerospace segment, in particular, showed strong performance, which RBC Capital believes offers potential for margin expansion. The Marine segment also demonstrated solid earnings before interest and taxes (EBIT) growth, further underpinning the positive assessment.

The company provided an updated forecast for its G700 aircraft deliveries, suggesting an increase to 27 units in the fourth quarter of 2024. This update was described as incrementally positive by RBC Capital, indicating a brightening outlook for General Dynamics' production and delivery capabilities in the near term.

RBC Capital's analysis points to the Aerospace and Marine segments as key drivers for General Dynamics' stock value. The firm highlights these segments for their potential to contribute to margin improvement and absolute EBIT growth, respectively, reinforcing their recommendation to maintain an Outperform rating on the shares.

In summary, RBC Capital's revised price target reflects their confidence in General Dynamics' segment performance and delivery outlook, suggesting a continued positive trajectory for the company's financials and stock valuation.

In other recent news, General Dynamics Corporation (NYSE:GD) reported a solid third quarter in 2024, with a 10.4% revenue increase, reaching $11.67 billion. The rise was primarily driven by significant growth in the Aerospace and Marine Systems segments, with the Aerospace sector surging by 22% and Marine Systems growing by 20%.

Despite challenges in the supply chain and a shortfall in G700 aircraft deliveries, the company maintains a positive outlook for the fourth quarter.

Year-to-date revenue for General Dynamics reached $34.4 billion, with net income standing at $2.63 billion. The total backlog increased to a substantial $92.6 billion, with a record estimated contract value of $137.6 billion. Full-year guidance includes an expected revenue of approximately $48 billion and an earnings per share (EPS) of about $14.

The company anticipates a strong fourth quarter and expects full-year revenue to be around $48 billion, with Aerospace sales projected at $12.3 billion and Marine Systems revenue forecasted at $13.9 billion.

Despite a few bearish highlights, such as the G700 aircraft delivery shortfall and pressures in the manufacturing sector, the company remains optimistic about its financial performance. These are just a few of the recent developments for General Dynamics.

InvestingPro Insights

General Dynamics' strong performance highlighted in the article is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $83.57 billion, reflecting its significant presence in the Aerospace & Defense industry. GD's revenue growth of 11.07% over the last twelve months and 10.41% in the most recent quarter aligns with the robust 10% growth mentioned in the article.

InvestingPro Tips reveal that General Dynamics has raised its dividend for 11 consecutive years and has maintained dividend payments for 46 consecutive years. This consistent dividend policy underscores the company's financial stability and commitment to shareholder returns. The current dividend yield is 1.87%, with a dividend growth rate of 7.58% over the last twelve months.

The stock's P/E ratio of 23.33 and its trading near its 52-week high suggest investor confidence in GD's future prospects. This aligns with RBC Capital's Outperform rating and increased price target. For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights to further evaluate General Dynamics' investment potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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