General Dynamics Corp (GD)

P/E = 18.6x v 17.7x for S&P 500

Price/Sales 1.3x v 1.5x

P/CF = 15.0x v. 11.6x

Profit Margin 7.2% v 7.8%

Return on Equity 17.4% v 15.6%

Return on Assets 8.3% v 3.0%

P/E = 18.6x v 15.9x

Long Term Growth = 13.3% v 13.0%

PEG = 1.4x v 1.4x

De inimico non loquaris sed cogites - Don't wish ill for your enemy; plan it.

The notion that the Democrats will be soft on defense is misplaced. We still live in a scary world. 35% of GD's sales come from information systems and technology. What is the chance those programs will be discontinued?

There are not many companies that compete for building major weapons systems. You just don't hear about start up companies deciding to build nuclear submarines. Bad for the taxpayer- good for the company.

18% of their business comes from the sale of corporate jets. The soft economy will hurt that line of business, but there are companies and fat cats around the world who don't fly coach.

In this time of great concern about the credit worthiness of one's customers, it is nice to sell to the folks who print our money.

Finally, from 1997 to 2007, GD's sales went up 21% annually, earnings went up 15% annually, and dividends went up 10.4% annually. Now you can buy GD for less than 10 times earnings.

Not a bad deal.

Nice dividend. All our war systems need replacement and repair thanks to being in an almost constant state of war. They have cut their debt by about 50% over the last two years. They don't dilute shares. Growth rate is 15% per year over the last five years. There is a lot to like with GD.

Full of government contracts, very excellent cash flow, but alot of overhead and political hassles to get work. Nothing truly in the assembly line. But expect more sub contracts in future years. Immediately just a bump in the road

GD has mastered the art of growth-via-acquisition. The company is rated by Aviation Week as the "Best Managed Aerospace company", but GD's even stronger in Information Technology, building equipment for NASA, the military, and government agencies. If you want a company that is rated tops for safety, and quality of product and management, this is it.

General Dynamics (GD) is one of the largest aerospace and defense companies in the United States. It operates through four key divisions: Aerospace, Information Systems & Technology, Combat Systems and Marine Systems. The aerospace segment manufactures the Gulfstream line of business jets primarily for commercial customers, while the other three segments develop and manufacture communication systems, armored vehicles, munitions, naval ships and submarines primarily for the U.S. military. The company had $19.2 billion in revenues in 2004, approximately 70% of which came from the U.S. government. General Dynamics serves two major market segments: defense and commercial aerospace. Nearly 90% of almost 280 analysts rate this stock as buy or hold, while only 10% suggest selling it. Another reason to favor General Dynamics is its fast-growing corporate-jet business, Gulfstream. With more and more corporations seeking to shield their executives from the hassles of flying commercial, Gulfstream now boasts an order backlog of $6.5 billion. GD announced a 2?for?1 stock split and a 15% dividend increase in early 2006. General Dynamics has a relatively strong management team in place. Led by CEO Nicholas Chabraja, GD has far outpaced its peers in the transformation from bloated legacy defense giant to lean, flexible, and extremely cost-conscious firm. General Dynamics shares are subject to a number of risks, including cyclical downturns in the business jet market, declines in defense spending, and the loss of major defense contracts to competitors.

Gd is another of my steady hitters that pays a good dividend for me to watch it work it way around the bases.

It's a great company, BUT.....

Lots of people have made lots of $ over the past 5 years on GD. As uncertainty about the Dems winning the presidency mounts next year, andthe consequent impact on defense spending, people will look to lock in their profits and move to more politically favorable sectors.

Business is booming for General Dynamics, net sales for 2005 were $21,244,000,000. 3 of the GD's divisions, Information Systems and Technology, Combat Systems, and Aerospace had backlogs in 2005 of $42.4 billion.

Information Systems and Technology revenues for 2005 were over $7.8 billion. IS&T provides secure IT systems to the US government and international customers to support intelligence and warfighting missions.

Combat Systems revenues rose 14% in 2005 to $5.0 billion because of Iraq and Afghanistan,which continue to provide strong demand for several programs such as, the Stryker wheeled vehicle, M1 Abrams tank and the Marine Corps Light Armored Vehicle. The US military also has increased requirements for GD ammunition and high performance armaments. The backlog for Combat Systems increased in 2005 to $9.3 billion.

Gulfstream Aerospacesawit revenue rise to $3.4 billion for sales of it's popular jet aircraft. Gulfstream had 121 new aircraft orders in 2005, an increase of 26 over 2004. Total backlog increased to $8.1 billion enabling Gulfstream to increase production rates by 27% in 06 and 13% in 07. Gulfstream 06 production is sold out,a large portion of 07 production is sold. Better place your order for 2008 before that seels out as well!

Marine Systems suffered setbacks, however, 2005 Q4 earnings were up over Q3 earnings. Backlogs decreased 8% in 2005. US government FY2006 and FY2007 budgets have increased for new ships and for the support of existing US Navy ships.

$30B Major defense contractor for US and allied armed forces. Manufactures a whole spectrum of defense products and systems, from guns and ammo to battle tanks, attack submarines, surface warships, and command, control, and communications systems, and special mission satellites and payloads. Also manufactures the Gulfstream fleet of business jets for corporations and private individuals. Maintains a funded backlog, currently $32B, which amounts to 14 to 18 months of revenue.
Earnings have steadilly increased over the last six years, while P/E is steady and declining, as is EV/FCF.

Great time to get in on GD for the long haul. Steady increase in cash and equity over the last ten years is textbook. Defense sector yes, but major diversification within the sector. Long term potential superb.

P/E = 18.6x
Price/Sales 1.3x
P/CF = 15.0x
Profit Margin 7.2%
Return on Equity 17.4%
Return on Assets 8.3%

Plus tremendous growth in there IT division GDIT. Which also further diversifies GD.

This sector is lagging during the past year but outperforming during the last five. A recovering economy bodes well for the industry. While this stock's price has suffered due to industry worries over the year, its earnings have still shown some growth. Dividend growth is also good sign of company strength. Together the sector boost and company's strength will allow for three years' worth of gains, most likely in one.

The military is always going to need tanks and planes.

Defense spending is a big priority with Bush. GD will outperform the market at least until Bush leaves office in January 2009 and we find out what a new administration does with the defense budget.

General Dynamics is among the numerous defense companies that have benefited no end from the US Government’s war on terror in Iraq and Afghanistan. General Dynamics (GD) has its dirty fingers in every pie and operates in 4 segments namely Marine Systems, Combat Systems, Information Systems and Technology and Aerospace.

2006 has been yet another year of war for America and naturally General Dynamics has had an excellent year with revenues increasing 14.7% and crossing 24 billion for the first time. Its 4Q’06 revenues were up 13% and the company reduced debt to 1.2 billion. General Dynamics seems to be a favorite with the US army as it produces its main battle tank Abrams. The backlog at the end of the year totals a mind boggling $43.7 billion which translates nearly two years worth of sales. The company has also received a 7 year $400 million contract for the repair and maintenance of amphibious assault ships from the US Navy.

The good news does not end there. The defense companies must be firing guns into the air in ecstasy as President Bush has asked for no less than $624.6 billion for the Pentagon in 2008, in the new defense budget. Nearly 142 billion will be spent to finance the wars in Iraq and Afghanistan. This is up around 50 billion from 2007. So it does appear that the defense run will continue into the future what with a potential war with Iran looming large.

Additionally, neither the democrats nor the republicans seem to be willing to stick their necks out and announce a feeble defense policy as this might be viewed as a timid approach towards national security. The army budget in 2007 has also increased 60% over 2006. Of course this is ominous news for the Iraqis and their neighbors but it is excellent news if you happen to be a shareholder in General Dynamics. With the company predicting a 9% revenue increase to $26.3 billion in 2007, it seems to be a smooth sailing for General Dynamics.

Government is paying the R&D expenses for this company. GD is trading at an EV/FCF of less than 5. They have very little debt and grow their shareholder equity at a steady pace year by year. An ROE above 20 is not exactly low. Even thought the payot ratio is in the low twenties GD still pays more than a 3% dividend yield at current price levels. Only negative thing about GD is the fact that the directors are paid more than 30 million dollars to run this company.

I like this defense stock, but frankly you can't go wrong with any of the large cap defense stocks for the next 10 years, be it Republican or Democrat in the White House. Safe 15% to 20% yearly return here...

Aerospace is hot and will continue to stay hot. General Dynamics is selling a lot of small jets to countries other than the US.

Earnings growth is 15%.

Sales growth is 11% per year. Good, but not great.

Dividend has a great growth rate (18%) and yield (1.3%) and this dividend is very safe.

This stock is worth $130