General Dynamics Corp (GD), a global aerospace and defense company, posted better-than-expected Q2 earnings, driven by improved margins and robust aerospace order activity. Meanwhile, revenue for the quarter missed analysts’ expectations.
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The company reported Q2 earnings of $2.61 per share, up 19.7% year-over-year, and beat analysts’ expectations of $2.54. Notably, in aerospace, Gulfstream book-to-bill was 2.1x.
Revenue of $9.2 million lagged the Street’s estimates of $9.3 million and declined marginally from the year-ago period, mainly impacted by lower aerospace revenues.
The company’s aerospace revenues decreased 17.8% year-over-year, while marine systems revenue surged 2.6%. Additionally, combat systems revenue jumped 8.3%, and technologies revenue recorded a rise of 3.2%. (See General Dynamics stock charts on TipRanks)
Consequently, General Dynamics updated its guidance for 2021. It projects EPS to be around $11.50, compared to the prior range of $11.00 to $11.05.
Following the Q2 results, Cowen & Co. analyst Cai Rumohr reiterated a Buy rating and a price target of $230 (38% upside potential) on the stock.
Rumohr expects “healthy lift in Gulfstream results in 2022 and likely 2023.”
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating. That’s based on 6 Buys, 1 Hold, and 1 Sell. The average General Dynamics price target of $211.13 implies 8% upside potential to current levels. Shares have surged 34% so far this year.
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