General Dynamics: Buy, But Limited Upside Potential (NYSE:GD)

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With continuing growth in commercial aviation and defense spending, the aerospace and defense industry is poised to have a bright prospect. Today I would like to talk about General Dynamics (NYSE:GD), the company

Trailing P/E

Trailing P/B

Median

24.175

3.03

CDRE

1

35.21

5.76

AIR

2

31.52

1.83

TXT

3

18.35

2.25

MOG.A

4

23.43

2.31

HXL

5

38.32

3.4

WWD

6

39.48

3.78

CW

7

25.08

3.73

AXON

8

165.4

11.51

BWXT

9

32.08

8.51

HWM

10

35.96

5.01

NOC

11

16.17

4.78

LMT

12

16.12

11.98

GD

13

19.79

3.38

RTX

14

19.59

1.49

HII

15

17.15

2.44

HEI

16

57.84

7.8

LHX

17

42.51

1.83

DCO

18

24.92

1.11

VTSI

19

12.1

1.43

OTCQB:BUKS

20

11.4

1.12

CVU

21

3.63

5.85

DRS

22

11.8

2.28

ISSC

23

26.91

3.67

NPK

24

20.94

1.59

OPXS

25

15.29

2

PKE

26

29.18

2.68

P/B
High Low

P/E

High CDRE, HXL, WWD, CW, AXON, BWXT, HWM, HEI, ISSC AIR, LHX, DCO, PKE
Low NOC, LMT, GD, CVU TXT, MOG.A, RTX, HII, VTSI, BUKS, DRS, NPK, OPXS

GD Sector Median
P/E (FWD) 18.64 19.21
EV/Sales (FWD) 1.75 1.61
P/S (FWD) 1.51 1.26
P/B (FWD) 3.2 2.33
Div Yield (TTM) 2.22% 1.63%

Year

1H 2023

1Q 2022

2022

2021

2020

2019

2018

Operating revenue

100%

100%

100%

100%

100%

100%

100%

Cost of sales

85%

83%

83%

83%

83%

82%

81%

Gross margin total

15%

17%

17%

17%

17%

18%

19%

Gross margin from products

9%

10%

10%

10%

11%

12%

12%

Gross margin from services

7%

7%

7%

7%

6%

6%

7%

Selling and administrative expenses

6%

7%

6%

6%

6%

6%

6%

1H 2023

1H 2022

2022

2021

2020

2019

2018

Operating assets

Cash and equivalents

0%

0%

0%

0%

0%

0%

0%

Accounts receivable, less allowance for doubtful accounts

6%

7%

6%

6%

6%

7%

8%

Inventories

15%

13%

13%

11%

12%

13%

13%

Other current assets

3%

2%

3%

3%

4%

2%

2%

Property, plant and equipment, net

12%

11%

12%

11%

10%

9%

9%

Goodwill

40%

41%

40%

41%

41%

41%

44%

Identifiable intangible assets

3%

4%

4%

4%

4%

5%

6%

Other non-current assets

5%

5%

5%

5%

5%

5%

2%

Total operating assets

100%

100%

100%

100%

100%

100%

100%

Operating liabilities

Accounts payable – non-interest bearing

15%

15%

15%

15%

13%

14%

15%

Accrued liabilities

37%

30%

33%

30%

27%

30%

34%

Income taxes payable

14%

15%

15%

17%

17%

15%

16%

Other liabilities

35%

40%

38%

38%

43%

41%

35%

Total operating liabilities

100%

100%

100%

100%

100%

100%

100%

Year

1H 2023

1H 2022

2023

2022

2021

2020

2019

Return On Common Equity (ROCE)

10%

8%

17%

29%

23%

24%

21%

Return On Net Operating Assets (RNOA)

6%

7%

14%

15%

15%

17%

16%

Year

2022

2023E

2024E

2025E

2026E

2027E

Return On Net Operating Assets

14%

14%

14%

14%

14%

14%

Residual Operating Income (ReOI)

1302

1807

1870

1963

2061

2103

Cost of operations

7.58%

Total Present Value (PV) of ReOI to 2023

7871

Continuing value (CV)

61126

PV of CV

42425

Net Operating Assets as of 2023

28140

Value of operations

78436

Net Financial Obligations

(9451)

Value of common equity

68985

Number of shares outstanding

273

Value per share

$252.69

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