General Dynamics Corp (NYSE:GD)

CAPS Rating: 3 out of 5

The Company's business comprises of business aviation; land and expeditionary combat vehicles and systems, armaments, and munitions; shipbuilding and marine systems; and mission-critical information systems and technologies.

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Member Avatar nicolace (< 20) Submitted: 6/30/2014 2:56:22 PM : Outperform Start Price: $116.11 GD Score: +8.97

As of June 30th, 2014, General dynamics has outperformed the S&P 500 over the last:

10 yrs by 59.06%
5 yrs by -(2.98%)
1 yr by 26.84% (since june 2013).

-It has an above average EPS (7.13), which means it has around 35 times more income than outstanding shares (more than all its competitors except Lockheed Martin)
-The lowest P/E ratio of all its competitors: 16.35 (the average P/E ratio of S&P companies in 2013 was 18.19)
-Average volatility
-Sound management indicated by continuous growth and slow but steady recovery from the financial crisis

In terms of financials (annual data from 2013-2012) GD has:

-$35 B in total assets
-$14 B in total equity (more than all its competitors, except Honeywell)
-$31 B in revenue
-$2 B in net income
-$3 B in total debt (lower than all its competitors)

In perspective, it has a lot of equity, an above average income/revenue ratio, industry-average assets, ever-increasing dividend and little debt.

All these indicators show that GD is undervalued and will continue to outperform the S&P in the long run.

Source: Google Finance, Yahoo Finance

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Member Avatar NuclearSolutions (27.92) Submitted: 6/8/2014 8:19:05 AM : Outperform Start Price: $120.35 GD Score: +4.82

Castration a Media Gimmick, Terrorism a thing of the past, Government Red Tape is here to stay.

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Member Avatar Dividends500 (73.02) Submitted: 5/16/2014 4:27:37 PM : Outperform Start Price: $107.70 GD Score: +12.92

Dividends500 tracks the 200 strongest dividends in the S&P 500. To qualify as a strong dividend, the company must meet two simple requirements:

- A payout ratio below 50%
- An increasing dividend from the prior year

Because there are more than 200 dividend paying companies in the S&P 500 that meet these requirements, the qualifying companies with the largest dividend yields were chosen.

Dividends500 intends to test this FactSet article, which highlights these strong dividend paying companies and their outperformance versus the S&P 500 as a whole (Page 12).

http://www.factset.com/websitefiles/PDFs/dividend/dividend_12.16.13

If you have questions or see something you think is inaccurate feel free to let me know.

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Member Avatar kevday (98.89) Submitted: 5/5/2014 9:30:52 AM : Outperform Start Price: $110.12 GD Score: +10.11

reasonable PE, nice dividend, chart looks good

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Member Avatar afewgoodstocks11 (26.05) Submitted: 4/9/2014 12:03:08 PM : Outperform Start Price: $66.85 GD Score: +45.35

Div. (Yield) $2.48 (2.3%)
Current Yield . . . . . . 3.6%

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Member Avatar HappyQuant (77.42) Submitted: 12/6/2013 5:49:08 PM : Outperform Start Price: $89.35 GD Score: +34.28

Undervalued vs peers. GD doesn't have stellar projected EPS growth, but doesn't deserve to be sitting at it's current PE either. I'd like to see this one trading at $105 towards the end of 2014.

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Member Avatar mcw841 (< 20) Submitted: 7/19/2013 4:28:28 PM : Underperform Start Price: $82.19 GD Score: -39.03

Aside from defense spending cuts, the Army simply has no need for aquiring additional tanks. The stryker program is also being downsized considerably. Sure, they are consolidating a lot of their businesses and acheiving impressive cost cutting, and those strategic moves will likely keep the bottom line of this company looking quite impressive for some time to come. However, it will be crucial to pay attention to the top line revenue declines that will be sure to impact this company over the next several years. From a macro perspective and in conclusion, there is no reason this stock should be trading near all time highs as we pull out of Afghanistan and seek to downsize out military.

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Member Avatar MaybeSasquatch (< 20) Submitted: 6/12/2013 4:47:46 PM : Outperform Start Price: $75.78 GD Score: +46.67

Going to give this a long term outperform as a bit of a homer. I used to monitor the company's efforts and products in the defense industry and although I've seen R&D sink a healthy chunk of taxpayer money I think GD has a good chance to turn a profit on their innovations long term.

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Member Avatar jgkavanaugh (22.37) Submitted: 3/4/2013 12:56:05 PM : Underperform Start Price: $64.07 GD Score: -69.86

Every single metric for this company seems to scream 'over valued'

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Member Avatar tsperbeck (99.73) Submitted: 12/10/2012 1:37:33 PM : Outperform Start Price: $65.04 GD Score: +58.21

Waiting on that catalyst...

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Member Avatar aswartz3 (< 20) Submitted: 9/18/2012 8:48:54 PM : Outperform Start Price: $63.05 GD Score: +68.58

Recent certification of two Gulfstream aircraft that are back ordered for years to come. Other branches of General Dynamics all functioning well.

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Member Avatar WuTangInvestment (85.18) Submitted: 8/21/2012 12:39:49 PM : Outperform Start Price: $63.01 GD Score: +64.51

Defense industry all day long;
Plus GD's design for the LCS is going to be used in the Pacific theater as the Navy moves to the Pacific. Looks to be profitable.

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Member Avatar DrRonPaul4Prez (54.28) Submitted: 2/20/2012 8:32:26 AM : Outperform Start Price: $66.46 GD Score: +47.99

Buffet.

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Member Avatar fooluser17 (< 20) Submitted: 2/17/2012 2:14:54 PM : Outperform Start Price: $65.80 GD Score: +49.50

Defense spending...while getting a good amount of revenue from non-gov't sources. Will prob make 2-2.5%.

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Member Avatar tallenuk (< 20) Submitted: 12/28/2011 1:53:20 PM : Outperform Start Price: $61.35 GD Score: +50.82

War with Iran

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Member Avatar TMFNiner (72.56) Submitted: 11/28/2011 3:43:15 PM : Outperform Start Price: $56.70 GD Score: +55.71

Here's a fool.com piece I wrote about General Dynamics:

http://www.fool.com/investing/general/2011/11/26/the-hidden-dividend-stock-that-buffett-just-bought.aspx?source=itxsitmot0000001&lidx=3

The Hidden Dividend Stock That Berkshire Just Bought
Brendan Byrnes
November 26, 2011

Warren Buffett, the so-called Oracle of Omaha, knows a thing or two about investing. That's why it was huge news when Buffett announced last week that his company, Berkshire Hathaway (NYSE: BRK-B ) , had purchased a total of 5.5% of IBM (NYSE: IBM ) , an investment worth $10.7 billion.

The headlines were predictable. "Buffett Changes His Philosophy, Buys Tech Stock." "Should You Follow Buffett into IBM?"

But lost in the IBM shuffle were Berkshire's other (albeit smaller) moves. Berkshire also opened new positions in several companies, including Intel (Nasdaq: INTC ) , and Visa (NYSE: V ) . Berkshire purchased 9.3 million Intel shares valued at $199 million and 2.29 million shares of Visa worth $196 million.

However, another such "small" move by Buffett's firm has me the most excited. That's because it's a solid company with a strong dividend. Which Berkshire pick am I putting a bullish CAPScall on today?

Boom!
That'd be General Dynamics (NYSE: GD ) . Berkshire has purchased 3.1 million shares of General Dynamics since March for $174 million. General Dynamics is a well-established defense contractor that's been around since 1899 and pays a solid (and steady) 2.9% dividend. GD is also cheap -- it's currently trading at less than 9 times earnings. Why is that?

Over the past year, GD was beating the S&P 500 before summer began. However, after May, GD trails the S&P fairly substantially and winds up down about 7% so far this year versus the S&P.

It looks as if the market has beaten GD and other defense contractors down because of the possibility of defense cuts. That's been a worry for owners of these stocks for a while, but this summer was when the talk about cutting defense spending really started to heat up. Coincidentally, that's exactly where GD opens a prolonged negative spread against the S&P.

You're nuts!
You might be calling me crazy for giving a defense contractor a thumbs-up right now, especially after the epic (though not unexpected) failure of the congressional "supercommittee" to reach a long-term debt deal triggered up to $600 billion in further defense cuts over 10 years, beginning in 2013.

Time to invoke more Buffett. This time a vintage quote from the man himself: "Be fearful when others are greedy, and greedy when others are fearful."

I believe that the debt crisis and subsequent decline in GD's stock price has created an opportunity for investors to buy GD for cheaper than they otherwise could.

Sure, about 72% of GD's 2010 revenues came from the U.S. government. And that might be a scary stat given the current political climate. But once you compare that number with those of GD's competitors, it gets a little bit more palatable.

Lockheed Martin (NYSE: LMT ) , the world's biggest defense contractor, received 84% of its 2010 revenues from the U.S. government. And Northrop Grumman (NYSE: NOC ) had the U.S. government account for a whopping 92% of its 2010 revenues.

So even though GD does get the majority of its revenues from the government, it is better diversified than many of its big defense-contractor competitors, mainly because of its successful Gulfstream business jet segment.

GD also has many of its defense contracts in areas that are assumed to be less likely to be cut. Through its Electric Boat segment, GD has been the primary builder of submarines for the U.S. Navy for more than 100 years. The company continues to churn out subs at a steady pace, with marine systems accounting for a total of $3.6 billion in revenue for the company in 2010.

Luckily for GD, when you're the No. 1 maker of submarines, you get paid to fix them as well. To that end, GD was recently awarded an additional $429 million as part of a $1.2 billion contract for nuclear-sub support work. It pays to be No. 1.

Foolish bottom line
I believe that fears over defense cuts are overblown, especially for a company like GD. America will always spend whatever it takes to defend itself. Count me among those who don't think we'll see $600 billion cut from defense spending. Moreover, GD is a rock-solid dividend stock with a long track record. Don't expect a 10-bagger here, but trading at less than 9 times earnings, this stock is oversold -- and that's why I'm giving it a thumbs-up in My CAPS portfolio today.

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Member Avatar JohnLeven (20.80) Submitted: 11/27/2011 1:15:02 PM : Outperform Start Price: $57.91 GD Score: +63.31

Military-Industrial Complex.

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Member Avatar mtinvest (90.39) Submitted: 11/21/2011 10:00:06 AM : Outperform Start Price: $56.52 GD Score: +61.05

Ted Combs from Omaha also bought a few shares ;-)

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Member Avatar BKITU (95.19) Submitted: 10/26/2011 12:27:00 PM : Outperform Start Price: $59.33 GD Score: +55.19

Slight overperform. Rock-solid company, looks to be underpriced while outperforming its peers financially.

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Member Avatar xrich0 (67.81) Submitted: 10/25/2011 8:39:23 PM : Outperform Start Price: $61.57 GD Score: +48.84

Strong IP, Contracts in a down defense market.

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