Upcoming AWS Coverage on Huntington Ingalls Industries Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 9, 2017 / Active Wall St. announces its post-earnings coverage on General Dynamics Corp. (NYSE: GD). The Company disclosed its fourth quarter and fiscal year 2016 results on January 27, 2017. The Defense contractor outperformed earnings expectations and provided bullish outlook. Register with us now for your free membership at:

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One of General Dynamics' competitors within the Aerospace/Defense Products & Services space, Huntington Ingalls Industries, Inc. (NYSE: HII), announced on January 19, 2017, that it will release its Q4 2016 financial results on Thursday, February 16, 2017, and host an earnings conference call at 9 a.m. ET the same day. AWS will be initiating a research report on Huntington Ingalls in the coming days.

Today, AWS is promoting its earnings coverage on GD; touching on HII. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended, December 31, 2016, General Dynamics' revenue grew 5.4% to $8.23 billion compared to Q4 2015 revenue of $7.81 billion. The Company's revenue numbers missed analysts' estimates of $8.26 billion. For FY16, General Dynamics reported revenue of $31.35 billion.

For Q4 2016, General Dynamics' operating margin was 13.6%, 30 basis points higher than Q4 2015 margin, with expansion in Aerospace, Information Systems and Technology, and Marine Systems. For FY16, the Company's operating margin was 13.7%, 40 basis points higher than FY15 margin.

General Dynamics reported Q4 2016 net earnings of $797 million, or $2.58 per share, up from $764 million, or $2.40, a year earlier. The Company's earnings, adjusted to account for discontinued operations, were $2.62 per share, surpassing Wall Street's expectations for earnings of $2.54 per share. For FY16, the Company reported profit of $2.96 billion, or $9.52 per share.

Segment Highlights

For Q4 2016, General Dynamics' Aerospace group revenue increased 3.8% to $2.22 billion, operating earnings grew 6.3% on a y-o-y basis to $436 million, and operating margin advanced 50 basis points to 19.6%.

General Dynamics' Combat Systems revenue surged 10.5% to $1.68 billion in Q4 2016, operating earnings totaled $259 million up 10.7%, while operating margin remained flat at 15.4% as the group continued its strong program and operating performance. The group booked multiple significant contracts in the reported quarter, including a $320 million contract from the US Army for double-V-hulled Stryker vehicles.

For Q4 2016, General Dynamics' Information Systems and Technology group reported revenue of $2.28 billion, operating earnings of $244 million and operating margin of 10.7%. Compared to Q4 2015, revenue grew 5.7%, earnings advanced 6.1%, and margin improved 10 basis points. The group had a book-to-bill ratio of approximately one-to-one for FY16.

General Dynamics' Marine Systems reported Q4 2016 revenue of $2.04 billion, operating earnings of $186 million, and operating margin of 9.1% compared to Q4 2015 revenue increased 3%, earnings grew 8.1%, and margin was up 40 basis points. The group continues to execute on its extensive backlog and was awarded significant contracts in the reported quarter, including $375 million from the US Navy for the design and construction of a fifth Expeditionary Sea Base auxiliary support ship.

Cash flow & Balance Sheet

General Dynamics' net cash provided by operating activities for FY16 totaled $2.2 billion. The Company's free cash flow from operations was $678 million in Q4 2016. For FY16, General Dynamics had free cash flow from operations of $1.81 billion, which is 59% of earnings from continuing operations. The Company ended 2016 with a cash balance of $2.3 billion on the balance sheet and a net debt position of $1.6 billion.

Backlog

General Dynamics' total backlog at the end of FY16 was $59.8 billion. The estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity contracts, and unexercised options, was $25 billion. Total potential contract value, the sum of all backlog components, was $84.8 billion at the end of FY16.

Outlook

In Aerospace, General Dynamics' expect FY17 revenue to be between $8.3 billion to $8.4 billion, up 6.4% from FY16. Operating earnings are projected to be approximately $1.6 billion, with an operating margin rate of 19.1% to 19.2%. In aerospace for the five-year period, 2016 through 2020, the Company expects sales compound annual growth rate (CAGR) of 5.3%. For the same period, the operating earnings for the segment are expected to be CAGR 5.9%.

In combat systems, General Dynamics' expects revenue to be up 6.6% to 6.7% in FY17, with operating earnings of $920 million to $925 million. This implies a margin rate of around 15.6%. For the period 2016 to 2020, the expected sale CAGR is approximately 8.7% and earnings CAGR of about 9.6%.

For FY17, General Dynamics' marine group is expected to have revenue of $7.9 billion, a reduction of 2.6% against 2016. Operating earnings in FY17 are anticipated to be $680 million to $685 million, with an operating margin rate around 8.6%. The 2016 to 2020 sales CAGR are forecasted to be 5%, while the expected earnings CAGR for the marine group for 2016 to 2020 is about 9%.

General Dynamics' Information Systems and Technology group is expecting a modest improvement in revenue in FY17, and operating earnings of $1 billion to $1.05 billion, with a margin rate of around 11%. For this group, the Company sees a 2016 to 2020 CAGR for sales and earnings of 4.5% and 5.3%, respectively.

Overall for General Dynamic, revenue for FY17 is expected to be $31.35 billion to $31.4 billion. The Company's operating earnings are forecasted to be in the range of $4.15 billion to $4.2 billion, while operating margin is expected to be around 13.3%. For FY17, General Dynamics is projecting guidance of $9.50 to $9.55 for fully-diluted shares. For the period 2016 to 2020, General Dynamics is forecasting consolidated sales CAGR of 5.6%, and operating earnings CAGR of 7.1%.

Stock Performance

On Wednesday, February 08, 2017, the stock closed the trading session at $183.14, marginally falling 0.04% from its previous closing price of $183.21. A total volume of 1.25 million shares have exchanged hands. General Dynamics' stock price rallied 20.70% in the last three months, 24.42% in the past six months, and 41.52% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 6.53%. The stock is trading at a PE ratio of 18.54 and has a dividend yield of 1.66%.

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