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On 31 December 2018, General Dynamics Corporation (NYSE:GD) announced its earnings update. Overall, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 1.7% next year compared with the higher past 5-year average growth rate of 3.8%. Presently, with latest-twelve-month earnings at US$3.4b, we should see this growing to US$3.4b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for General Dynamics in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from General Dynamics in the longer term?
Over the next three years, it seems the consensus view of the 16 analysts covering GD is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, GD’s earnings should reach US$4.0b, from current levels of US$3.4b, resulting in an annual growth rate of 6.4%. This leads to an EPS of $13.92 in the final year of projections relative to the current EPS of $11.37. In 2022, GD’s profit margin will have expanded from 9.3% to 9.6%.
Future outlook is only one aspect when you’re building an investment case for a stock. For General Dynamics, there are three important factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is General Dynamics worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether General Dynamics is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of General Dynamics? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.