General Dynamics and Lockheed Martin: Full Corporate Analysis

Topics: Balance sheet, Financial ratios, Martin Marietta Pages: 19 (6116 words) Published: November 6, 2008
Executive Summary
General Dynamics (GD) is a market leader in business aviation; land and expeditionary combat vehicles and systems, armaments, and munitions; shipbuilding and marine systems; and mission-critical information systems and technologies (Gendyn, 2008). Lockheed Martin (LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta (Lockheed, 2008). I have compared both companies under various criteria such as ratio analysis, stock price performance, common size financial statements and then have tried to comment on which is company is better. The current market price of General Dynamics is $92.46 and the average target price is $100, which represents a premium of around 8% from the current level. On the other hand, the current market price of Lockheed Martin is $117 and the average target price is $124, which implies a premium of around 6%. From the comparison of both companies based on the financial and market analysis, General Dynamics has been on a growth trend. If an investor wants to invest in a company which has better long term growth, General Dynamics would be a better option as compared to Lockheed Martin. Most of the margin is better for General Dynamics as compared to Lockheed Martin and also growth in sales and earnings before interest and taxes is better for General Dynamics as compared to Lockheed Martin. Some of the key reasons why General Dynamics should be selected for investment are summarized below: When both companies are compared based on profitability and margin analysis we can see that General Dynamics is better placed than Lockheed Martin The liquidity position of General Dynamics is far better than Lockheed Martin and therefore General Dynamics is better placed as compare to Lockheed Martin. The solvency ratio of General Dynamics is far better than Lockheed and therefore General Dynamics is better placed than Lockheed Martin. The historical stock price performance of General Dynamics is better as compared to Lockheed Martin. Stock Selection: Concepts and Practices

For the purpose of the analysis, I have selected two companies, General Dynamics and Lockheed Martin. Both companies are into production and marketing of aircrafts and other equipments generally used for defense. Both companies provide defense related equipments to various countries and also fulfill the demand of the United States. Both companies have been of great interest due to the fact that both have performed very well as compared to NASDAQ and S&P 500 over the last three years. During the recent times when the stock price of most other companies were falling flat in the market, the stock price of both the companies have shown significant growth, which shows the financial strength of the company and also how much faith the general public has on the operations and management of both the companies. From the stock price chart of General Dynamics and its comparison with Lockheed Martin, NASDAQ and S&P 500 we can summarize the following: An investment of $100 made three years ago in the stock of General Dynamics will yield a return of 67% today as compared to an investment in NASDAQ, which will yield only 13%, resulting in a better return as compared to NASDAQ indices.  An investment of $100 made three years ago in the stock of General Dynamics will yield a return of 67% today as compared to an investment in S&P 500, which will yield only 5%, resulting in a better return as compared to S&P 500 indices. An investment of $100 made three years ago in the stock of General Dynamics will yield a return of 67% today as compared to an investment in Lockheed Martin, which will yield a return of 90%, resulting in a lower return as compared to Lockheed Martin.

Industry, Company and Competitors Description
Introduction of General Dynamics:
General Dynamics has leading market positions in business aviation,...

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