General Dynamics Case Summary
Does General Dynamics Set to Give Back Recent Gains?
General Dynamics (NYSE:GD) shares spiked significantly following Donald Trump’s election victory, thanks to the new president’s aggressive defense expansion plans. GD’s stock price surged almost 17% to the highest level of $178 a share, before falling back to $173 a share in the last three sessions.
The company’s stock price plummet after Trump criticizing the "out of control" costs of joint strike fighter jets that Lockheed Martin is building for the Pentagon and ally countries.
The president’s tweet strongly impacted defense companies’ shares in the last few sessions, as this situation has posed a risk on several large contracts. Here, investors are questioning whether GD’s share price …show more content…
After a recent rally in General Dynamics stock price in the last month, the company offers a compelling selling opportunity for the short-term value investors, as its stock price surged only due to Trump-related optimism, which seems to be diffusing after its latest tweet. The company’s stock looks fairly priced around 18 times to earnings, but looks expensive considering higher price to sales ratio.
However, at the same time, GD shares also offers steady returns for the long-term investors, who are looking for stable share price appreciation along with solid cash returns.
Cowen analysts warn that while Pres.-elect Trump's Air Force One criticism likely will not hurt Boeing (NYSE:BA) and General Dynamics, his habit of using Twitter as a bully pulpit could pose a bigger risk for LMT and NOC, which have big-ticket defense contracts.
Aside from Trump-related optimism, GD is likely to generate a sustainable growth in earnings. In the latest quarter, the company’s earnings surged 8%, compared with the same period last year. In addition, the company’s dividends appear safe on the back of its strong cash generation potential. In addition, year-to-date, the company has repurchased 11.2 million outstanding shares. With an order backlog of almost 62 billion, General Dynamics is a good stock for the long-term
General Dynamics (NYSE:GD) shares spiked significantly following Donald Trump’s election victory, thanks to the new president’s aggressive defense expansion plans. GD’s stock price surged almost 17% to the highest level of $178 a share, before falling back to $173 a share in the last three sessions.
The company’s stock price plummet after Trump criticizing the "out of control" costs of joint strike fighter jets that Lockheed Martin is building for the Pentagon and ally countries.
The president’s tweet strongly impacted defense companies’ shares in the last few sessions, as this situation has posed a risk on several large contracts. Here, investors are questioning whether GD’s share price …show more content…
After a recent rally in General Dynamics stock price in the last month, the company offers a compelling selling opportunity for the short-term value investors, as its stock price surged only due to Trump-related optimism, which seems to be diffusing after its latest tweet. The company’s stock looks fairly priced around 18 times to earnings, but looks expensive considering higher price to sales ratio.
However, at the same time, GD shares also offers steady returns for the long-term investors, who are looking for stable share price appreciation along with solid cash returns.
Cowen analysts warn that while Pres.-elect Trump's Air Force One criticism likely will not hurt Boeing (NYSE:BA) and General Dynamics, his habit of using Twitter as a bully pulpit could pose a bigger risk for LMT and NOC, which have big-ticket defense contracts.
Aside from Trump-related optimism, GD is likely to generate a sustainable growth in earnings. In the latest quarter, the company’s earnings surged 8%, compared with the same period last year. In addition, the company’s dividends appear safe on the back of its strong cash generation potential. In addition, year-to-date, the company has repurchased 11.2 million outstanding shares. With an order backlog of almost 62 billion, General Dynamics is a good stock for the long-term