General Dynamics Earnings Sneak Peek

S&P 500 (NYSE:SPY) component General Dynamics (NYSE:GD) will unveil its latest earnings on Wednesday, October 24, 2012. General Dynamics offers products and services in business aviation, combat vehicles, weapons systems and munitions as well as information systems, technologies and services.

General Dynamics Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of $1.77 per share, a decline of 3.3% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.83. Between one and three months ago, the average estimate moved down. It has been unchanged at $1.77 during the last month. For the year, analysts are projecting profit of $7.10 per share, a decline of 2.5% from last year.

Past Earnings Performance: The company is looking to make a streak of three quarters of beating estimates. Last quarter, it beat expectations by reporting net income of $1.77 per share, and the previous quarter, it had profit of $1.70.

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Stock Price Performance: Between July 25, 2012 and October 18, 2012, the stock price rose $6.58 (10.6%), from $62 to $68.58. The stock price saw one of its best stretches over the last year between October 10, 2012 and October 18, 2012, when shares rose for seven straight days, increasing 5.2% (+$3.42) over that span. It saw one of its worst periods between May 10, 2012 and May 18, 2012 when shares fell for seven straight days, dropping 4.8% (-$3.20) over that span.

A Look Back: In the second quarter, profit fell 2.9% to $634 million ($1.77 a share) from $653 million ($1.76 a share) the year earlier, but exceeded analyst expectations. Revenue rose 0.5% to $7.92 billion from $7.88 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.27 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.42 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 11.2% to $12.18 billion while assets rose 0.1% to $15.53 billion.

Key Stats:

An income boost this time around would be welcome news after profit drops in the past three quarters. Net income fell 17.3% in the fourth quarter of the last fiscal year, by 8.7% in the first quarter and again in the second quarter.

On the top line, the company is hoping to build on a revenue increase last quarter. Revenue fell 2.8% in the first quarter after increasing in the second quarter.

Wall St. Revenue Expectations: Analysts predict a rise of 2.4% in revenue from the year-earlier quarter to $8.04 billion.

Analyst Ratings: With 12 analysts rating the stock a buy, none rating it a sell and six rating the stock a hold, there are indications of a bullish stance by analysts.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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