GD
GD
Accumulate 2026-03-05
Model
DCF
Price at Report
$357.11
Base IV
$394.18
Bear IV
$299.02
Bull IV
$536.31
Entry Zone: 320-360 · Sell Above: 420
Bore Family Office
Valuation Report — General Dynamics Corporation (GD) • March 5, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.20% • Current Price: $357.11
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
General Dynamics is one of the Big Five US defense primes with roots to 1952. Four segments: Aerospace (Gulfstream business jets, ~22% of revenue), Marine Systems (nuclear submarines, ~25%), Combat Systems (M1 Abrams, Stryker vehicles, ~20%), and Technologies (IT/C4ISR, ~33%). $106B backlog provides extraordinary revenue visibility. Record US defense budget (~$895B in FY2024) drives sustained demand. 28-year Dividend Aristocrat with room for continued growth.
📊 Financial Snapshot
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | $31,353 | $30,973 | $36,193 | $39,350 | $37,925 | $38,469 | $39,407 | $42,272 | $47,716 | $52,550 |
| EBITDA ($M) | $4,763 | $4,618 | $5,220 | $5,114 | $4,656 | $4,731 | $4,797 | $4,853 | $5,440 | $6,036 |
| Operating Income ($M) | $4,309 | $4,177 | $4,457 | $4,648 | $4,133 | $4,163 | $4,211 | $4,245 | $4,796 | $5,356 |
| Net Income ($M) | $2,955 | $2,912 | $3,345 | $3,484 | $3,167 | $3,257 | $3,390 | $3,315 | $3,782 | $4,210 |
| EPS (diluted) | $9.00 | $9.00 | $11.22 | $11.98 | $11.39 | $11.55 | $12.19 | $13.27 | $14.33 | $15.60 |
| Free Cash Flow ($M) | — | — | — | $1,994 | $2,891 | $3,384 | $3,465 | $3,806 | $3,196 | $3,959 |
| Annual DPS | — | — | $3.720 | $4.040 | $4.400 | $4.760 | $5.120 | $5.520 | $5.760 | $5.892 |
| Total Debt ($M) | — | — | — | — | — | — | — | — | — | — |
| Rev YoY Growth | — | -1.2% | +16.9% | +8.7% | -3.6% | +1.4% | +2.4% | +7.3% | +12.9% | +10.1% |
📈 DCF Scenarios
$299
🔴 Bear
$394
📊 Base
$536
🚀 Bull
$357.11
Current Price
$364
Analyst Avg PT
📋 Full 10-Year Projection Tables
Bear Scenario
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $4.18B | $3.90B | $3.90B |
| Year 2 | Stage 1 | $4.37B | $3.80B | $7.70B |
| Year 3 | Stage 1 | $4.56B | $3.71B | $11.41B |
| Year 4 | Stage 1 | $4.77B | $3.61B | $15.02B |
| Year 5 | Stage 1 | $4.98B | $3.52B | $18.54B |
| Year 6 | Stage 2 | $5.13B | $3.38B | $21.92B |
| Year 7 | Stage 2 | $5.29B | $3.25B | $25.17B |
| Year 8 | Stage 2 | $5.45B | $3.12B | $28.30B |
| Year 9 | Stage 2 | $5.61B | $3.00B | $31.30B |
| Year 10 | Stage 2 | $5.78B | $2.88B | $34.18B |
| Terminal | — | TV=$113.4B | PV(TV)=$56.6B (62% of EV) | EV=$90.7B |
Base Scenario
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $4.28B | $3.99B | $3.99B |
| Year 2 | Stage 1 | $4.58B | $3.99B | $7.98B |
| Year 3 | Stage 1 | $4.90B | $3.98B | $11.96B |
| Year 4 | Stage 1 | $5.24B | $3.97B | $15.93B |
| Year 5 | Stage 1 | $5.61B | $3.96B | $19.89B |
| Year 6 | Stage 2 | $5.89B | $3.88B | $23.77B |
| Year 7 | Stage 2 | $6.19B | $3.80B | $27.57B |
| Year 8 | Stage 2 | $6.49B | $3.72B | $31.30B |
| Year 9 | Stage 2 | $6.82B | $3.65B | $34.94B |
| Year 10 | Stage 2 | $7.16B | $3.57B | $38.52B |
| Terminal | — | TV=$156.2B | PV(TV)=$77.9B (67% of EV) | EV=$116.4B |
Bull Scenario
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $4.40B | $4.10B | $4.10B |
| Year 2 | Stage 1 | $4.84B | $4.21B | $8.32B |
| Year 3 | Stage 1 | $5.32B | $4.32B | $12.64B |
| Year 4 | Stage 1 | $5.86B | $4.43B | $17.07B |
| Year 5 | Stage 1 | $6.44B | $4.55B | $21.62B |
| Year 6 | Stage 2 | $6.89B | $4.54B | $26.16B |
| Year 7 | Stage 2 | $7.38B | $4.53B | $30.70B |
| Year 8 | Stage 2 | $7.89B | $4.52B | $35.22B |
| Year 9 | Stage 2 | $8.44B | $4.52B | $39.74B |
| Year 10 | Stage 2 | $9.04B | $4.51B | $44.25B |
| Terminal | — | TV=$221.6B | PV(TV)=$110.6B (71% of EV) | EV=$154.8B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.2% | $559 | $630 | $728 | $869 | $1094 |
| 5.7% | $485 | $537 | $605 | $698 | $834 |
| 6.2% | $427 | $466 | $516 | $581 | $670 |
| 6.7% | $380 | $410 | $448 | $495 | $558 |
| 7.2% | $341 | $365 | $394 | $430 | $476 |
| 7.7% | $309 | $328 | $351 | $379 | $413 |
| 8.2% | $281 | $297 | $316 | $338 | $364 |
| 8.7% | $258 | $271 | $286 | $303 | $325 |
| 9.2% | $237 | $248 | $261 | $275 | $292 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
🏦 Comparable Valuation
| Company | Ticker | Rev Growth | P/E | FCF Yield | Backlog |
|---|---|---|---|---|---|
| General Dynamics | GD | +10% | 23.4x | ~3.1% | $106B |
| Lockheed Martin | LMT | +5% | 18x | ~5% | $165B |
| RTX Corp | RTX | +9% | 20x | ~3.5% | $222B |
| Northrop Grumman | NOC | +5% | 17x | ~4% | $85B |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $5.892 |
| Current Yield | 1.65% |
| Consecutive Growth Years | 28 |
| 1-yr DPS CAGR | +2.3% |
| 3-yr DPS CAGR | +5.4% |
| 5-yr DPS CAGR | +4.4% |
| 10-yr DPS CAGR | +6.0% |
| Payout Ratio (DPS/EPS) | 39.0% |
| FCF Payout Ratio | 40.0% |
| Sustainability Verdict | Safe |
Verdict: Safe. 28-year Dividend Aristocrat. 39% payout ratio. Dividend is secondary to buybacks as capital return — highly secure.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $11.39 | — | — | — | Actual |
| 2021 | $11.55 | — | — | — | Actual |
| 2022 | $12.19 | — | — | — | Actual |
| 2023 | $13.27 | — | — | — | Actual |
| 2024 | $14.33 | — | — | — | Actual |
| 2025 | $15.60 | — | — | — | Actual |
| 2026 | $14.50 | $16.20 | $17.50 | 16 | Estimate |
| 2027 | $16.00 | $17.80 | $19.00 | 16 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $37.9B | — | — | — | Actual |
| 2021 | $38.5B | — | — | — | Actual |
| 2022 | $39.4B | — | — | — | Actual |
| 2023 | $42.3B | — | — | — | Actual |
| 2024 | $47.7B | — | — | — | Actual |
| 2025 | $52.5B | — | — | — | Actual |
| 2026 | $54.0B | $56.3B | $58.5B | 16 | Estimate |
| 2027 | $56.0B | $58.8B | $62.0B | 16 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $364.38 | Range $236–$408
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Ronald Epstein | B of A Securities | Strong Buy | $400 | +12.0% |
| John Godyn | Citigroup | Hold | $389 | +8.9% |
| Gavin Parsons | UBS | Hold | $388 | +8.6% |
| Seth Seifman | JP Morgan | Buy | $385 | +7.8% |
| Sheila Kahyaoglu | Jefferies | Hold | $385 | +7.8% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q2 2025 | $3.65 vs $3.60 | +$0.05 ✅ | $12.9B vs $12.7B | +$0.2B ✅ | In-line |
| Q3 2025 | $3.82 vs $3.74 | +$0.08 ✅ | $13.2B vs $13.0B | +$0.2B ✅ | Beat across segments |
| Q4 2025 | $4.15 vs $4.10 | +$0.05 ✅ | $14.0B vs $13.8B | +$0.2B ✅ | Strong Gulfstream |
| Q1 2025 | $3.58 vs $3.50 | +$0.08 ✅ | $12.5B vs $12.3B | +$0.2B ✅ | Defense backlog growth |
(e) Confidence Band Commentary
Consistent modest beats. Long-cycle defense contracts provide high revenue visibility. Gulfstream jets are the key variable — cyclical and premium-priced.
💡 Investment Thesis
Bull: $106B backlog, record defense budget, Gulfstream G700/G800 production ramp, 23x P/E = cheapest major defense prime on growth-adjusted basis.
Bear: Gulfstream demand is cyclical. Virginia-class submarine cost overruns pressured 2023-24 margins. Analyst consensus PT barely above current price.
⚖️ DCF Verdict: Accumulate — General Dynamics Corporation (GD)
Current price: $357.11 | Analyst Avg PT: $364.38
$299
🔴 Bear
$394
📊 Base
$536
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$360 | Begin position |
| Tier 2 — Add | ≤$340 | Add on weakness |
| Tier 3 — Full | ≤$320 | Full allocation |
| Sell Alert | ≥$420 | Above fair value — consider trimming |
Accumulate at $357. Base DCF $394 (+10%), bull $536. 28-year Dividend Aristocrat. Starter at current levels; add aggressively at $320-340 (~20x P/E).
Bore Family Office • Analysis generated by Lurch • Not investment advice.