GD

We rate GENERAL DYNAMICS CORP (GD) as a Buy with a composite score of 69.3/100 at a current price of $352.02. The stock scores above average across the majority of our six quantitative factors and ranks #111 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (94th percentile) and value (88th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (33th percentile) and momentum (61th percentile) tempers our overall conviction. We assign a Narrow Moat rating (68/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

GENERAL DYNAMICS CORP holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 69.3/100 places it at rank #111 in our full 7,333-stock universe. With a $90.6B market capitalization, GENERAL DYNAMICS CORP operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 8% and favorable momentum (61th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 15% (-27.5pp vs sector) narrow to operating margins of 10% (+8.9pp vs sector) and net margins of 8.0%, yielding a gross-to-net conversion rate of 53%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $352.02, GENERAL DYNAMICS CORP appears undervalued relative to its fundamentals. Our value factor score of 88/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 23.8x (roughly in line with the sector median of 22.3x), EV/EBITDA of 17.9x (at a premium), P/B of 3.7x, P/S of 1.9x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to GENERAL DYNAMICS CORP. The company exhibits strong financial stability with a beta of 0.57, conservative leverage (32% D/E), and a stability factor in the 94th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.57 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 94th percentile and quality factor at the 80th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (94th percentile) suggests predictable business dynamics; large-cap scale ($90.6B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate GENERAL DYNAMICS CORP's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 15.6%, and the balance sheet is managed within acceptable parameters (D/E: 32%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; GENERAL DYNAMICS CORP falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.77% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, GENERAL DYNAMICS CORP receives a Buy rating with a composite score of 69.3/100 (rank #111 of 7,333). Our quantitative framework assigns a Narrow Moat (68/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 71/100.

Our analysis supports a constructive view on GENERAL DYNAMICS CORP. The combination of identifiable competitive advantages, low uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.