General Dynamics Corporation
GD · NYSE
GD · NYSE
Expected to report Jan 27, 2027 — estimated from last year’s reporting date.
Consensus is $4.52 EPS for Dec 2026 across 7 estimates, ranging $4.39 to $4.64.
General Dynamics delivered a strong third quarter, with $4.49 of diluted EPS beating the $4.14 consensus by $0.35 and topping the year-ago $3.88 by 15.7%. Revenue of $14.57 billion rose 12.9% year over year, operating earnings advanced 14.7% to $1.53 billion, and margin widened 20 basis points to 10.5%. The company also improved sequentially from Q2: revenue increased 3.3% from $14.09 billion and operating earnings rose 4.6% from $1.46 billion. Management said EPS was about 6% higher sequentially.
The most consequential feature was the surge in defense bookings, led by submarine awards that took backlog to a record $220.3 billion, up from $136.5 billion in Q2. Marine Systems also delivered the fastest growth, though its 7.9% margin included a favorable one-time cumulative catch-up on the Virginia Block IV program. Aerospace combined higher deliveries and improved execution with 1.4-to-1 book-to-bill. Cash generation remained substantial year to date, while quarterly free cash flow was lower than a year ago as investment rose. Management raised full-year EPS guidance for the fourth time this year, to $17.20–$17.30. The filing also disclosed ongoing government investigations into Electric Boat accounting and billing, with potential material consequences if adverse.
The quarter’s standout was the order intake: $98.8 billion overall, including $93.8 billion in the defense segments, drove company-wide book-to-bill to 6.8-to-1. Defense book-to-bill was 8.5-to-1 and Aerospace was 1.4-to-1. Backlog climbed to $220.3 billion from $136.5 billion at the end of Q2 and $109.9 billion a year earlier. Adding $50.3 billion of estimated potential contract value brought total estimated contract value to $270.7 billion.
Marine Systems was the largest growth contributor: revenue rose 21.1% to $4.96 billion and operating earnings increased 34.4% to $391 million. Higher construction volumes on Columbia- and Virginia-class submarines led the expansion, alongside growth in surface-ship work. Management cited improved throughput and productivity across the shipyards, including higher earned hours at Electric Boat. It also reported output and throughput on Columbia and Virginia up 30% year over year.
Aerospace revenue increased 9.3% to $3.54 billion and operating earnings grew 19.3% to $513 million. Its 14.5% margin expanded 120 basis points, reflecting improved manufacturing efficiency and aircraft mix as well as stronger services activity. Gulfstream delivered 40 aircraft, compared with 39 a year ago, including 35 large-cabin aircraft versus 33. Aircraft services also benefited from greater maintenance and fixed-base-operator activity.
Quarterly operating cash flow was $1.71 billion, or 139% of net earnings, while free cash flow was $1.23 billion after $481 million of capital expenditures. Free cash flow was below the year-ago $1.90 billion, when capital expenditures were $212 million. For the first nine months, however, operating cash flow reached $5.75 billion and free cash flow $4.83 billion, equal to 137% of net earnings. Management expects full-year free-cash-flow conversion of about 105% and capital expenditures of 3.5%–4% of revenue, with some fourth-quarter spending potentially shifting into 2027.
The 10-Q disclosed that the SEC and DOJ Civil Division contacted General Dynamics in August regarding investigations into Electric Boat’s accounting for submarine contracts. The company subsequently received subpoenas from the Department of War Inspector General, in consultation with the DOJ Civil Division, and the SEC. The requests concern aspects of cost recording and billing, accounting, and related financial reporting and disclosures. GD said it is cooperating, cannot assess the outcome or estimate a possible loss, and an adverse result could materially affect results, financial condition or cash flows.
