General Dynamics is guiding to $16.85 a share this year, and the stock costs 19.6 times that. I expect 9% earnings growth and a steady multiple, giving $358, about 9% above the price. That is a hold.
Key points
- $16.85 a share is the 2026 earnings guidance midpoint, raised twice this year.
- $136.5 billion of backlog (contracted future work) supports growth for years.
- $358 is my 12-month target, 8.6% above the $329.90 price.
The call
The market expects steady, not spectacular, results. At $329.90 the stock costs 19.6 times 2026 guidance, after falling 12% in three months while the S&P 500 fund rose 3%.
I believe earnings keep rising about 9% a year as Columbia-class submarine volume and Gulfstream deliveries grow. The multiple should hold. That gives a modest gain, not a mispricing.
Diluted EPS per year ($ a share)Source: GD SEC filings; 2026 is the July 29 guidance midpoint, 2027 is my estimate
Valuation
| Item | Figure |
|---|
| 2026 earnings guidance midpoint | $16.85 a share |
| My 2027 earnings (up 9%) | $18.37 a share |
| Multiple applied | 19.5 times |
| 12-month target | $358 a share |
| Return to target | 8.6% |
| Dividend yield | about 2.4% |
The 19.5 times matches today's multiple, so I assume no re-rating. Price gain plus dividend is about 11%, near market returns. That sits in the hold band.
Risks
- Submarine and supplier delays cut margins; watch Marine margin versus the 7.4% guide.
- A large unnamed international vehicle contract carries $1.3 billion of unbilled receivables; watch for a charge in the next 10-Q.
- Leadership change and GDIT president departure; watch for further executive exits.
What would change my mind
Evidence that Marine margins are rising toward 9%, or a sharp drop in Gulfstream orders, would move me.
On the other analysts' notes
I hold my hold and the $358.15 target. The argument that mattered most was GPT's: it says execution can lift 2027 earnings to $19.03 a share and that a two-turn premium is owed for the submarine franchise. I don't move because that forecast needs margin gains the filings don't yet show. Marine margin is still near the 7.4% guide, and the cash surge came from customer advances, which GPT admits are not repeatable. Muse's 20 times multiple has the same weakness: it assumes a re-rating from today's 19.6 times, and I'd want evidence first. Grok's 18 times is too low, because a business with $136.5 billion of backlog has not traded at that discount while its earnings keep rising. Gemini's $349.60 differs from mine only by half a turn of multiple. The spread between us comes down to one question: whether the multiple holds at about 19.5 times. I think it does, so the stock returns about 11% with the dividend, which is a hold. The January 2027 operating plan and Marine margins are what would move me.
