General Dynamics' (GD) Q1 Earnings: Is A Beat In The Offing?
Zacks Investment Research | Apr 19, 2018 09:44PM ET
General Dynamics Corporation (NYSE:GD) is scheduled to release first-quarter 2018 results on Apr 25, before the opening bell.
We expect inflow of military contracts from the Pentagon and product launches to continue boosting the military shipbuilder’s revenues in the quarter to be reported. Solid cash flow is also expected to get reflected in the upcoming results.
Let’s take a detailed look at the factors influencing General Dynamics’ quarterly results.
Dividend Hike: A Boon
General Dynamics’ strong cash generating capability provides the company with financial flexibility, which in turn allows it to hike dividend significantly and repurchase shares. This, in turn, makes the stock a valuable pick for investors. Notably, its cash and cash equivalents were $2,983 million at 2017-end compared with $2,334 million at 2016-end. Moreover, its cash flow from operating activities was $3,879 million in 2017 compared with $2,198 million in 2016.
Last month, the company increased its quarterly dividend by 10.7%. Impressively, the latest hike marked the 21st consecutive annual dividend hike.
The raised dividend indicates General Dynamics’ optimism on solid cash inflow, which we believe will get reflected in its yet-to-be reported results.
New Products & Orders to Boost Sales
Order flow form Pentagon as well as foreign allies of the United States generally boost quarterly sales of defense bellwethers, and General Dynamics is no exception. Notably, the company’s business division, Electric Boat, clinched a modification contract worth $696.2 million for supplying long lead time materials for the construction of fiscal 2019 and fiscal 2020 Virginia-class submarines.
Moreover, in February, the company unveiled its newest aircrafts — Gulfstream G500 and Gulfstream G600 — at the Singapore Airshow. Such innovations are expected to provide impetus to Gulfstream business’ revenues, which we believe will get reflected in the upcoming quarterly results. In sync with this, the Zacks Consensus Estimate for the company’s first-quarter sales is pegged at $7.5 billion, reflecting 1.4% year-over-year growth.
General Dynamics Corporation Price and EPS Surprise
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