Defense and aerospace operator
General Dynamics Corporation
) announced third-quarter 2012 operating earnings of $1.70 per
share, falling short of the Zacks Consensus Estimate by 7 cents.
It also missed the year-ago figure by 7.1%.
GENL DYNAMICS (GD): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
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General Dynamics generated total revenue of $7.85 billion in the
reported quarter versus $7.93 billion in the year-ago quarter,
reflecting a paltry growth of 1%. The year-over-year growth in
revenue was primarily attributable to positive contribution from
its Aerospace and Marine Systems segments, partly offset by
decline in the Combat Systems and Information Systems and
Technology Aerospace segments.
The reported quarter's revenue failed to meet the Zacks Consensus
Estimate of $8.05 billion.
Operating costs and expenses increased 2.5% year over year to
$7.2 billion in the quarter.
Backlog at the quarter end was $51.5 billion.
segment reported revenue of $1.41 billion, up 30% from the
prior-year period. Operating income from this segment was $217
million, up 20.3% year over year.
reported revenue of $2.14 billion, down 8.6% year over year.
Operating income from this segment was $319 million, declining
14.1% year over year.
reported revenue of $1.62 billion, up 3.0% from the year-earlier
period. Operating income from this segment was $173 million, up
7.5% year over year.
Information Systems and Technology
reported revenue of $2.68 billion, reflecting a decline of 7.8%
from the previous year. Operating income from this segment was
$310 million, plunging 35% year over year.
Cash and cash equivalents as of September 30, 2012, were $2.87
billion versus $2.65 billion as of December 31, 2011.
Long-term debts at quarter end totaled $2.9 billion, a decline
from $3.9 billion as of December 31, 2012. Debt-to-equity at the
end of third quarter 2012 was 27.5% versus 30.3% at the end of
third quarter 2011.
General Dynamics generated cash flow from operating activities of
$704 million in the quarter, surging from $137 million in the
Capital expenditure incurred were $110 million, lower than $121
million in the year-ago quarter.
Free cash flow totaled $594 million, a huge improvement from $16
million in the year-ago quarter.
Lockheed Martin Corporation
), which competes with General Dynamics, reported strong third
quarter 2012 earnings of $2.26 per share, surpassing both the
Zacks Consensus Estimate of $1.85 and year-ago earnings of $2.06
On the revenue front, Lockheed Martin reported quarterly net
sales of $11.9 billion, beating the Zacks Consensus Estimate of
$11.1 billion by $698 million. However, the figure fell below the
year-ago quarterly revenue of $12.1 billion.
Though General Dynamics failed to meet the expectations, we
remain upbeat due to improving business jet market, its stable
business of U.S. military vehicles, a backlog of over $51 billion
and strong cash flow generation.
However, like all defense majors, the future prospects of the
company are tied to the U.S. defense budget. With the
possibility of a cut in the defense budget, we presently retain a
Neutral outlook on the company. It currently holds Zacks #3 Rank,
translating into a short-term Hold rating.