General Dynamics (GD) Beats Q4 Earnings, Revenues Up Y/Y

General Dynamics Corporation (NYSE:GD) reported fourth-quarter 2017 earnings from continuing operations of $2.50 per share, beating the Zacks Consensus Estimate of $2.37 by 5.5%. Reported earnings were up 6.8% from $2.36 recorded in the year-ago quarter.

Taking into account a $119 million one-time impact from tax reforms in the fourth quarter, GAAP earnings were $2.10.

Total Revenues

In the quarter, General Dynamics’ total revenues of $8,277 million missed the Zacks Consensus Estimate of $8,437 million by 1.9%.

However, reported revenues were up 8.2% from $7,654 million in the year-ago quarter. The year-over-year increase in total revenues was primarily due to rise in demand for the company’s products.

General Dynamics Corporation Price, Consensus and EPS Surprise

General Dynamics Corporation Price, Consensus and EPS Surprise | General Dynamics Corporation Quote

Segment Performance

Aerospace: The segment generated revenues of $1,982 million, up 8.6% year over year. Operating earnings of $340 million increased 24.1% from the prior-year quarter figure of $274 million.

Combat Systems: The segment’s revenues rose 5.2% to $1,748 million. Operating earnings were up 13.0% to $260 million in the quarter.

Information Systems and Technology: The segment generated revenues of $2,487 million, up 9.5%. Operating income rose 22.1% to $282 million.

Marine Systems: The segment’s revenues of $2,060 million were up 8.6% from the year-ago figure of $1, 897 million. Operating income improved 297.6% to $167 million.

Operational Highlights

The company recorded a total backlog of $63.2 billion, up 1.6% year over year. Including the value in unfunded indefinite delivery, indefinite quantity contracts and unexercised options total backlog at the end of 2017 was $88 billion.

Company-wide operating margin in the fourth quarter expanded 250 basis points (bps) to 12.5% from the year-ago level of 10.0%.

Operating income at the end of the quarter was $1,034 million compared with $768 million in the year-ago quarter.

Financial Condition

As of Dec 31, 2017, General Dynamics’ cash and cash equivalents were $2,983 million compared with $2,334 million as of Dec 31, 2016.

Long-term debt as of Dec 31, 2017 was $3,980 million, up from the 2016-end level of $2,988 million.

The company’s cash flow from operating activities was $3,879 million for 2017 compared with $2,198 million in 2016.

Free cash flow (cash flow from operating less capital expenditure) the end of the 2017 was $3,451 million compared with $1,806 million in the previous year.

Zacks Rank

General Dynamics carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Upcoming Peer Releases

Northrop Grumman Corporation (NYSE:NOC) is expected to report fourth-quarter 2017 results on Jan 25 and the Zacks Consensus Estimate is currently pegged at $2.75. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a positive average surprise of 17.24%.

Raytheon Company (NYSE:RTN) is expected to report fourth-quarter 2017 results on Jan 25 and the Zacks Consensus Estimate is currently pegged at $2.02. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a positive average surprise of 6.50%.

L3 Technologies, Inc. (NYSE:LLL) is expected to report fourth-quarter 2017 results on Jan 25 and the Zacks Consensus Estimate is currently pegged at $2.31. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a positive average surprise of 9.13%.

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