General Dynamics Hits a 52-Week High - Analyst Blog

On May 27, 2014, shares of General Dynamics Corp. GD reached a new 52-week high of $116.48. Shares gained almost 49.4% in the past one-year period. Average volume of shares traded over the last three months came in at 2,067,910.

General Dynamics, a Zacks Rank #3 (Hold) stock, delivered positive earnings surprises in the last four quarters with an average beat of 6.68%. The company posted impressive first quarter 2014 results with its earnings outpacing the Zacks Consensus Estimates on the back of strong contributions from the Aerospace segment as well as falling operating cost.

For 2014, the company expects operating earnings in the range of $7.05 to $7.10 per share. The Zacks Consensus Estimate for 2014 is pegged at $7.32 per share, projecting a year-over-year improvement of 4.06%.

The company had a sizable backlog of $48.3 billion at the end of the first quarter of 2014, thanks to its diversified product offering. Combat Systems and Marine Systems received the bulk of these new orders.

Although the threat of sequestration still lurks over this defense major, General Dynamics seems to be on a wining spree grabbing both big and small ticket contracts.

The company received two sizable contracts in the past two months. Given its presence in the Virginia-Class submarines program, the company secured an $18 billion long-term U.S. Navy contract to supply 10 additional Virginia-Class submarines. In addition, General Dynamics Land Systems received a contract of $163 million from the U.S. Army TACOM Life Cycle Management Command. Per the contract, the company will convert 93 flat-bottom Stryker infantry combat vehicles to a newer, more survivable double-V hull design.

Other Stock to Consider

Other better-ranked stocks in defense and aerospace include Embraer SA ERJ, Huntington Ingalls Industries, Inc. HII and CAE Inc. CAE. While Embraer SA holds a Zacks Rank #1 (Strong Buy), Huntington Ingalls and CAE carry a Zacks Rank #2 (Buy).

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