TenQ

The General Dynamics story

General Dynamics builds Gulfstream jets and military systems, with the central question whether expanded shipbuilding capacity and aircraft deliveries can turn its growing backlog into higher margins and cash flow.

General Dynamics stock reportTenQ Score 23/36 · every chart and check from its filings
  • $344.23share price, last close
  • $93.1Bmarket value
  • 23/36TenQ Score checks passed
  • 3.4%growth a year the price assumes

The story in brief

  • Orders outpace revenue. In the quarter to July 2026, General Dynamics received $20 billion in orders, reported a company-wide book-to-bill ratio of 1.4-to-1 and ended with $136.5 billion in backlog.
  • Jets and ships lead. Aerospace revenue rose 15.1% and Marine Systems revenue rose 10.4% from a year earlier in the quarter to July 2026, with margin expansion in both segments.
  • Cash supports debt reduction. Operating cash flow reached $1.9 billion, or 162% of net earnings, in the quarter to July 2026, while total debt declined by $498 million.

What drives the business

  • General Dynamics' Electric Boat is the prime contractor and lead shipyard on all U.S. Navy nuclear-powered submarine programs, including Columbia-class and Virginia-class construction, with the Navy's Columbia program alone valued in excess of $125 billion.
  • Marine Systems accounted for 32% of consolidated revenue in 2025, and the company has expanded facilities, workforce training and its supply chain to support increased Navy ship and submarine production.
  • Aerospace contributed 25% of consolidated revenue in 2025 through Gulfstream and Jet Aviation, combining a renewed aircraft lineup, including the G800 that entered service in 2025, with support for more than 3,000 Gulfstream aircraft worldwide.
  • Combat Systems accounted for 17% of consolidated revenue in 2025, with Land Systems the sole-source producer of the U.S. Army's Abrams tank and Stryker vehicle, alongside international vehicle programs, weapons and munitions.
  • Technologies combines GDIT and Mission Systems, serving military, intelligence and civilian government customers through cloud services, cybersecurity, communications and other technology and mission-support work.

What the price assumes

At $326.63, the reverse DCF implies free cash flow after stock pay grows 2.8% a year for ten years, using a 10.3% discount rate.

That compares with delivered growth of 3.4% a year over the last 10 years and the TenQ check's bar of 3.7%.

Over the last twelve months, General Dynamics generated $6.4 billion in free cash flow before $214 million in stock-based pay, with a free cash flow yield of 7.3%.

Value GD on your own assumptions

What could change the story

  • Turning the shipbuilding backlog into revenue depends on expanding facilities, training workers and developing suppliers while executing concurrent submarine programs.
  • Revenue growth of 9.1% over the last twelve months was below the 10.1% annual pace over the last three years, leaving General Dynamics short of TenQ's growth acceleration check.
  • The near-term liquidity measure of 1.44 falls below TenQ's 1.50 threshold, despite the strong operating cash flow reported for the quarter to July 2026.
  • The $50.4 billion of estimated potential contract value reported in July 2026 is separate from backlog and includes unfunded contracts and unexercised options, so it is not equivalent to firm orders.
  • The earnings yield of 5.0% trails the 10-year Treasury yield of 5.3%, failing TenQ's earnings-yield comparison even though the cash-flow comparison is stronger.

What to watch next

  • The July 2026 earnings release contained no numerical guidance, leaving delivery rates, margins and cash conversion as concrete measures for subsequent releases.
  • Gulfstream delivered 41 aircraft in the quarter to July 2026 versus 38 a year earlier, while Aerospace's book-to-bill ratio reached 1.5x, making the relationship between new orders and delivery capacity important.
  • Subsequent segment results will show whether Aerospace can sustain its 14.5% operating margin and Marine Systems its 7.3% margin while production expands.
  • Operating cash flow and capital spending will show how much cash remains after investment in greater output, following $234 million in capital expenditures in the quarter to July 2026.

Sources

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