QS Research · Michael Burry's Scion Capital analyst template · 2006
GENERAL DYNAMICS CORP (GD)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $367.44 (close 2026-11-10)
Conclusion: PASS
Conviction medium · base case -19% · downside -24% · upside +12%
GD is a better business than the peer-median multiple implies - ROIC 15.4% against a 6.1% WACC (+9.3 pts, N44/N45), remaining performance obligations of $118.00B (2.09x TTM revenue, N48) and a Q3 2026 beat with FY2026 guidance raised on 2026-11-02 to $17.20-$17.30 EPS and $56.5B-$56.8B revenue (S11) - but at $367.44 you pay 21.3x TTM net income of $4.66B and 15.0x EBITDA of $6.81B (N31, N28), and the EBIT/EV earnings yield of 5.7% (N38) sits under the 6.1% WACC, so nothing is priced to go wrong. The independent anchor, the 17.2x peer-median P/E (N56), puts the same $4.66B base at $296.71, 19% below today, and the FY2026 guided EPS midpoint of $17.25 is already the whole price at 21.3x (21.3 x 17.25 = $367, S29), so my upside case must come from earnings, not the multiple: net income +12% to $5.22B x 21.3 = $111.1B / 270.22M shares = $411 (+12%). The downside takes the base 10% lower, to $4.19B, and prices it at a compressed ~18.1x (21.3x cut at least 15%, and below the 19.25x halfway point to 17.2x): $4.19B x 18.1 = $75.9B / 270.22M = ~$281 (-23.5%). That is roughly 1:2 reward-to-risk on a fairly priced franchise with $2.68B net debt (0.4x EBITDA, N24) and 0.9% short interest (N35) - no edge either way, so pass, with a long at 17-18x earnings or on a demonstrated $21+ EPS path.
Key numbers
- Share price: $367.44
- Market cap: $99.29B
- Latest financial period: TTM to Oct 4, 2026
- Revenue (TTM): $56.52B
- EV / EBITDA (TTM): 15.0x
- P/E (TTM): 21.3x
- FCF yield: 5.9%
- Price / book: 3.64x
- EV / FCF (TTM): 17.3x
- Revenue growth (latest fiscal year): +10.1%
- ROIC (TTM): 15.4%
- WACC: 6.1%
- Economic profit spread: +9.3 pts
The 15 boxes
- ✓ 1. Long-form business notes
General Dynamics is a four-segment aerospace and defense manufacturer: FY2025 Revenue was $52.55B, Operating income $5.36B and Net income $4.21B, and TTM to 2026-10-04 Revenue was $56.52B with Operating income $5.86B. It sells mostly to the U.S. government (68% of FY2025 consolidated revenue), with fixed-price production and cost-reimbursement services contracts. Between the FY2020 and FY2025 10-Ks, the company got larger, Aerospace rose to 25% of consolidated revenue in FY2025 from 21% in FY2020, and the Gulfstream and Marine backlog/product line changed (G700 entry from expected Q4 2022 to 2024; Columbia first delivery from 2027 to 2028).
- ✓ 2. Competitive advantage
GD has a narrow, program-specific moat, not a broad one. Marine Systems has a single primary competitor that is also its partner on Virginia-class and its subcontractor on Columbia-class, and multi-year program continuity gives real switching costs; but about 70% of consolidated revenue comes from one customer, the U.S. government, whose contracts can be terminated for convenience. Combat Systems and Technologies face large numbers of U.S. and non-U.S. rivals and Gulfstream faces several competitors per product, and the 10-K says the government holds licenses to many of its patents, so IP is not the barrier. The record is one of scale and steady execution, not pricing power: operating income rose from $4.13B (FY2020) to $5.36B (FY2025) to $5.86B (TTM to 2026-10-04) on revenue of $37.92B to $52.55B to $56.52B, with no margin erosion.
- ✓ 3. 10-Q takeaways
Q3 2026 (ended 2026-10-04) showed revenue of $14,566M (+12.9% y/y), operating earnings of $1,527M (+14.7%), operating margin of 10.5% (+20 bp), and diluted EPS of $4.49 (+15.7%). Nine-month revenue was $42,141M (+10.4%) with operating margin 10.5% (+30 bp) and diluted EPS $12.83. Backlog was $220.3B at quarter-end on $98.8B of orders (6.8x company book-to-bill), cash was $4.4B, and nine-month free cash flow was $4.827B; FY2026 guidance is revenue $56.5B-$56.8B, operating margin around 10.5%, and diluted EPS $17.20-$17.30. The 10-Q reports no material risk-factor changes.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.