RBC Capital Remains Bullish on General Dynamics (GD) Following 4Q
RBC Capital maintained an Outperform rating on General Dynamics Corp. (NYSE: GD), and cut the price target to $166.00 (from $173.00), following the company's 4Q earnings report. GD reported an EPS of $2.40, modestly beating consensus' estimates of $2.38. Initial 2016 guidance, which was introduced on the conference call, came in a little soft versus RBC's expectations, with the midpoint of $31.7B in revenues and $9.20 EPS.
Analyst Robert Stallard commented, "EPS in 4Q15 of $2.40 modestly beat consensus of $2.38 and our $2.37. Operating profit came in 1% lower than forecasts (both ours and consensus), as a decent operating margin mostly offset ~5% lower sales than expected (which were down 7% y/y). Results at Gulfstream and IS&T were the main driver of this trend. Lower tax helped the bottom line. However, free cash flow of $1.9B came in below consensus of ~$2.5B, reflecting work-offs of large advanced payments in Combat Systems and Marine, and working capital build on the G500/G600 programs. Book-tobill was ~0.7x in the quarter, although Gulfstream was relatively decent, ending the year at 1.0x while overall book to bill for the year was ~0.8x."
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Shares of General Dynamics Corp. closed at $129.00 yesterday.