On Monday, Jefferies maintained a Hold rating on General Dynamics Corp. (NYSE: NYSE:GD) while increasing the price target to $305 from the previous $275. This adjustment comes in the wake of the recent Federal Aviation Administration (FAA) type certification for the company's Gulfstream G700 aircraft on March 29.
General Dynamics is expected to begin customer deliveries of the G700 in the second quarter of 2024, following a period dedicated to pilot training and certification. Jefferies forecasts 45 aircraft deliveries for the year, slightly below the company's guidance of 50. These deliveries are projected to contribute approximately $3.4 billion to General Dynamics' 2024 sales, with $1.1 billion expected in the first quarter, equating to 68 cents per share.
The first deliveries of the G700 are anticipated to occur in the second quarter, which aligns with Jefferies' adjusted earnings per share (EPS) estimate of $2.73, in contrast to the consensus estimate of $3.19. The financial firm estimates that each G700 aircraft will likely add $75 million in revenue at an operating margin of 17%, which would translate to an incremental 4 cents in EPS.
The G700's FAA certification marks a significant milestone for General Dynamics' aerospace division, paving the way for the aircraft's entry into service. The financial implications of the G700's deliveries are reflected in the revenue and EPS projections for the upcoming quarters.
InvestingPro Insights
Following Jefferies' latest rating on General Dynamics Corp. (NYSE: GD), investors might find additional context from real-time data and insights particularly informative. Notably, General Dynamics has demonstrated a strong track record of dividend reliability, having raised its dividend for 10 consecutive years and maintained payments for 46 consecutive years, according to InvestingPro Tips. This consistency is likely to appeal to income-focused investors.
The company also exhibits stability in its stock price, which generally trades with low volatility. With the recent FAA certification and the upcoming G700 deliveries, General Dynamics is poised to reinforce its position as a prominent player in the Aerospace & Defense industry. The stock is trading near its 52-week high, which may indicate investor confidence in the company's near-term prospects. Additionally, General Dynamics has been profitable over the last twelve months, a trend analysts expect to continue this year.
From a financial standpoint, General Dynamics' market capitalization stands at $79.23 billion, with a Price/Earnings (P/E) ratio of 23.77, reflecting its earnings relative to its share price. The company's revenue growth over the last twelve months was 7.27%, a healthy sign of business expansion. Investors should also note the company's solid gross profit margin of 15.78%, indicating efficient control over its cost of goods sold.
For those interested in exploring further, there are additional InvestingPro Tips available, providing deeper insights into General Dynamics' financial health and market performance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more expert analysis and data to inform your investment decisions.
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