General Dynamics (
) is struggling to boost revenue, but its earnings are stable and
the stock is flying high.
The defense contractor is up 27% this year, outperforming the
S&P 500's 22% gain. The annual dividend yield is 2.5%, about
equal to the S&P 500 average.
The company last boosted its quarterly payout in March, an
increase of 5 cents a share, or 9.8%, to 56 cents. That
translates to an annual dividend of $2.24 a share.
Like many big caps, General Dynamics' profit and sales growth
has been slow but steady, rising for seven-straight years before
dipping to $6.57 a share last year. The company's three-year
Earnings Stability Factor is 4 on a scale of 0 (most stable) to
99 (least stable).
The earnings stability is due to the company's diversified
product lines, which have helped it fend off defense budget cuts.
The Falls Church, Va.-based company builds tanks, ships,
commercial aircraft and munitions. In recent years, it's made
acquisitions to expand into the growing information technology
sector that includes surveillance, computing and military
In August, General Dynamics was among more than a dozen
companies that won part of a $6 billion Homeland Security
contract to develop cybersecurity systems.
General Dynamics has pulled back to its 10-week line after
clearing an 87.95 flat-base buy point Sept. 16. The pattern
formed after the stock broke out above a 70.90 entry in a
saucer-with-handle base in April. It's currently testing
resistance around 90, its level prior to the economic slump that
began in 2008.
Analysts say share buybacks and dividend increases have
contributed to the stock's allure.
General Dynamics' Q3 results are due Wednesday. Profit for the
quarter is expected to be flat vs. a year earlier at $1.68 a
share. Sales are forecast to slip 2% to $7.76 billion.