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General Dynamics Gulfstream 700

General Dynamics: Gulfstream Is Slowing, But It’s A Buy

General Dynamics Corporation (GD) was impacted by the recent stock market downturn like most aerospace and defense stocks. However, compared to most of its competitors the stock price has not recovered as much. The stock price is still down about (23%) year-to-date. Some of the company’s major competitors including Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), and L3Harris Technologies (LHX) are essentially flat year-to-date. The main reason is that General Dynamics has exposure to the cyclical business jet market with its Aerospace segment. The company’s competitors do not. General Dynamics Gulfstream business is slowing in the near-term. The market is therefore, punishing the stock in the short term. However, the company’s defense segments are performing well and have strong backlogs. The result is that General Dynamics is undervalued relative to its competitors. This is an opportunity. Further, the stock is a Dividend Aristocrat and the yield is over 3% and the company just recently raised the dividend ~8% to $1.10 per share. I view General Dynamics as a long-term buy.

Business Jet Demand is Down

General Dynamics manufactures and sells business jets. It also provides aviation support services at airports that cater to business jets. In good times, the business grows rapidly as demand is strong. This comes about by introducing new models with longer ranges, more space, better amenities, and improved performance. For instance, General Dynamics recently achieved FAA certification and first customer delivery of the G600. The G650ER demonstrated a flight from Singapore to Tucson, Arizona. The company also announced the G700, which has even longer range and more space. Similarly, General Dynamics is growing its presence in the business aviation support market through acquisitions and expansion.

General Dynamics Gulfstream business is slowing. The coronavirus-induced global economic slowdown is having an impact on the business jet market. After an initial surge in demand, private flights declined as much as 40% in the U.S…

Disclosure: I am long GD.

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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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2 thoughts on “General Dynamics: Gulfstream Is Slowing, But It’s A Buy

    1. Sorry about that. It is an SA article. It is free for 10 days on SA and then goes behind a premium paywall. You can follow me on SA if you want to read it earlier. Alternatively sign up for my e-list. -DP

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