General Dynamics Corp.
) to beat expectations when it reports third quarter 2013 results
on Oct 23. Last quarter, the company posted a positive earnings
surprise of 11.73%. Let's see how things are shaping up prior to
Why a Likely Positive Surprise?
Our proven model shows that General Dynamics is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP:
(Expected Surprise Prediction), which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is at +2.40%. This is a meaningful and leading
indicator of a likely positive earnings surprise for the shares.
Zacks #3 Rank (Hold):
Note that stocks with Zacks Ranks of #1, 2 and 3 have a
significantly higher chance of beating earnings. The Sell rated
stocks (#4 and 5) should never be considered going into an
The combination of General Dynamics' Zacks Rank #3 (Hold) and
+2.40% ESP makes us confident of a positive earnings beat this
What is Driving the Better-than-Expected
General Dynamics' revenue exposure is spread over a broad
portfolio of products and services that is keeping the overall
growth momentum steady. The company's Jet sales at the Gulfstream
business are continuing to see traction even in the slowing
defense sales scenario. The $60 million top-of-the-line G650
large cabin business jet is in high demand, with orders booked
for the next five years. Gulfstream is expected to contribute
significantly to General Dynamics' earnings going forward.
General Dynamics is proactive in lowering costs and improving
competitiveness. Although the company will continue to incur
expenses for adjusting its operations to market conditions, the
initiatives taken by the company would help drive performance.
These include consolidating the Weapons Systems business into the
Munitions business and combining the U.K. business into the North
American Mobile Communications operation.
Despite the defense budget uncertainty and threat of
sequestration, the company continues to experience a steady flow
of contracts from the Department of Defense (DoD).
Other Stocks to Consider
General Dynamics is not the only firm looking up this earnings
season. We also see likely earnings beats coming from these three
Northrop Grumman Corp.
), with Earnings ESP of +1.66% and a Zacks Rank #2 (Buy).
ENGILITY HLDGS (EGL): Free Stock Analysis
GENL DYNAMICS (GD): Free Stock Analysis
HEICO CORP (HEI): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis
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), with Earnings ESP of +1.96% and a Zacks Rank #2 (Buy).
Engility Holdings, Inc.
), with Earnings ESP of +7.04% and a Zacks Rank #3 (Hold).