A look over the year
As you can see in the chart below, General Dynamics’ stock movement has seen steady positive growth throughout the year, supported by the company’s performance through all three quarters of 2014. The stock (GD) has delivered 50% returns year-to-date, while Lockheed Martin (LMT) has returned ~28%, Spirit Aerosystems (SPR) ~25%, and Excelis Corporation (XLS) -8% in the same period. The Dow Jones US Select Aerospace Index (ITA) has returned 7% in the same period.
GD stock saw a surge from $120 to $132 during the week of the Q3 results announcement, following high expectations for a “very good” quarter, and an even better positive surprise in earnings, margins, and EPS (earnings per share). This resulted from the company’s focus on creating shareholder value.
Still room to grow?
Given that the company’s stock has shown impressive growth over the years, does it still have room to grow? General Dynamics has various advantages over its competitors, as you saw in Part 4 of this series. These advantages give the company a strong foothold in its segments.
General Dynamics has been paying dividends uninterruptedly for the past many years, and its EPS have also grown. The company also has a low debt-to-equity ratio compared to other companies, a consistent share repurchase strategy, and annual earnings growth estimated to be about 8.5% for the next five years. It also has high operating margins, making it a good bet.
In the next article in this series, we’ll take a look at what could drive the company in the future.