Overview
General Dynamics
GD · NYSEQ3 2026Aerospace & Defense · Submarines and Business Jets
Revenue grew 12.9% year over year, EPS beat the estimate by 9.0%; the stock rose 0.5% in its first reaction.
- RevenueQ3
- $14.57B
- ▲ 12.9% YoY · Beat Estimate by 6.2%
- EPSGAAP
- $4.49
- Estimate $4.12 · Beat by 9.0%
Verdict
BUYGeneral Dynamics reported third-quarter revenue of $14.57 billion and earnings per share of $4.49, both well above expectations. Full-year earnings guidance rose for the third time, but the new range beat the market expectation by only 1.5% and the stock closed the day up 0.5%. The measure to watch now is how fast the $220 billion backlog turns into profit at the shipyards.
Close on Report DayOct 30
$372.59▲ 0.5%Report-Day Move
- Market Cap(Today)
- ≈ $101 B
- 1Y Return(At Report)
- + 8%
- P/E(At Today's Price · $17.01 · Trailing 12M)
- 21.9
- PEG(Company Guidance 2026)
- 1.87
- Net Margin(Trailing 12M)
- 8.2%
Earnings Summary
In 30 Seconds- Revenue of $14.57 billion beat estimates by 6.2%, and earnings per share of $4.49 beat by 9.0%.
- Submarine contracts lifted backlog to $220.3 billion, and full-year earnings guidance rose to $17.20-$17.30.
- The stock rose 4.3% intraday but closed up just 0.5% after guidance beat expectations by only 1.5%.
The Numbers
Backlog
$220.3B
▲ 101% YoY · Orders $98.8B
Operating Margin
10.5%
▲ 0.2 Points YoY · Marine 7.9%
2026 EPS Guidance
$17.20–17.30
Estimate $17.00 · 1.5% Above
Stock Reaction
▲ 0.5%
Close to Close · Intraday ▲ 4.3%
Quarterly Revenue ($ Billion)
12.91
Q3 25 · $12.9 B
14.38
Q4 25 · $14.4 B · QoQ + 11.4%
13.48
Q1 26 · $13.5 B · QoQ − 6.2%
14.09
Q2 26 · $14.1 B · QoQ + 4.5%
14.57
Q3 26 · $14.6 B · QoQ + 3.3% · YoY + 12.9%
14.36–14.66
Q4 26E · 14.36–14.66 · QoQ − 0.4% · YoY + 0.9%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Full-Year EPS17.2 – 17.3 $17.2 $17.3 $
Midpoint 17.25 · Market Expectation 17.00 · 16.80–16.90 in July1.5% Above Estimate ▲
- Full-Year Revenue56.5 – 56.8 billion56.5 billion56.8 billion
Midpoint 56.65 · Market Expectation 55.941.3% Above Estimate ▲
- Full-Year Operating Margin10.5%
10.5% in 9 Months · 10.2% in 2025Flat
- Q4 EPS (Implied)4.37 – 4.47 $4.37 $4.47 $
Derived From Annual Guidance · Q4 25 Actual 4.176.0% YoY Increase ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±1.7% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Marine Systems$4.96 BShare 34.1%▲ 21.1% YoY
- Technologies$3.68 BShare 25.3%▲ 10.8% YoY
- Aerospace$3.54 BShare 24.3%▲ 9.3% YoY
- Combat Systems$2.39 BShare 16.4%▲ 6.0% YoY
Key Metrics
Backlog
$220 B
▲ 100.6% YoYPress Release
Total Estimated Contract Value
$271 B
▲ 61.4% YoYPress Release
Free Cash Flow
$1.23 B
▼ 35.2% YoYPress Release
Gulfstream Deliveries
40 aircraft
▲ 2.6% YoYPress Release
Net Debt
$2.63 B
Press Release
Shares are computed over the segment total: $14.6 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“For those of you who are on our second quarter call, you may recall that we described it as a superb quarter, better than a powerful first quarter. While this quarter is even better. We also beat consensus by $0.37 in the quarter on more revenue and operating earnings than anticipated by the sell side. In short, it is a splendid quarter.”
- Record Backlog
- Gulfstream 200-delivery Goal
- January 2027 CEO Handover
Summary and Review
Summary
General Dynamics reported third-quarter revenue of $14.57 billion. That is up 12.9% year over year and 6.2% above the market expectation. Earnings per share came in at $4.49, beating the $4.12 estimate by 9.0%. The midpoint of full-year earnings guidance rose to $17.25. That is 1.5% above the $17.00 expectation, inside the in-line zone. The revenue and earnings gates are open, the guidance gate is in line. All four segments grew year over year.
The stock closed October 30 up 0.5% at $372.59. During the session it had risen 4.3% to as high as $386.60. Most of that gain faded as the day went on. The stock had also jumped 4.7% the day before earnings, so part of the good news was already priced in. The market did not read this report as a growth story. Guidance that only slightly beat expectations and implied fourth-quarter revenue growth of about 1% capped the enthusiasm.
Score 74, verdict buy. The quarter cleared two gates and guidance was in line. The record $220.3 billion backlog largely secures revenue for years ahead. Some caveats keep the score mid-band. Part of the jump in the Marine margin came from a one-time adjustment. The Combat Systems margin, by contrast, contracted 1.1 points. Free cash flow also fell 35.2% year over year as capital spending rose.
Full Review
Backlog doubled in a year.
The company booked $98.8 billion of orders in the quarter. Of that, $93.8 billion came from the defense segments. Backlog rose to $220.3 billion, up from $109.9 billion a year earlier. The source is submarines. According to the earnings call, Electric Boat won $29.5 billion for five Columbia-class submarines and $42.1 billion for nine Virginia-class submarines. Marine Systems backlog alone is $146.9 billion. That is more than ten times the segment's revenue in the first nine months of this year. Combat Systems backlog stands at $28.7 billion and Technologies at $19.4 billion. Defense book-to-bill was 8.5 times. Total estimated contract value, including options, reached $270.7 billion. The meaning for readers is clear: the challenge for coming years is production speed, not demand.
Marine margin rose, partly one-time.
Marine Systems revenue rose 21.1% to $4.96 billion. Operating earnings climbed 34.4%. The margin rose to 7.9% from 7.1% a year earlier. Management explained part of the jump. A one-time, performance-driven cumulative catch-up on the Virginia Block IV contract was booked to earnings. President Danny Deep said the baseline margin is in the mid-7% range once that effect is excluded. Still, output is rising. Submarine throughput is up 30% from the same period last year. Electric Boat has hired 6,000 new shipbuilders, and the number will reach 8,000 by year-end. Combat Systems moved the other way. Revenue rose 6.0%, but the margin contracted 1.1 points to 13.8%. Management tied this to the shift from production to development programs at Land Systems.
Gulfstream is widening its margin.
Aerospace revenue rose 9.3% to $3.54 billion. The segment margin widened 1.2 points to 14.5%. Gulfstream delivered 40 aircraft, compared with 39 a year earlier. Management credited efficiency gains in G700 and G800 production for the margin expansion. Aerospace orders were $4.97 billion, a book-to-bill of 1.4 times. New aircraft orders in the first nine months rose more than 30% from last year. The one soft spot is the Middle East. Customers there remain interested but are slow to place orders. The company aims to deliver 200 aircraft in 2030. A delivery gap is expected in 2027 between the G280 exit and the G300 arrival. Management said larger-cabin aircraft will more than offset it. In its view, 2027 should still be better than 2026.
Cash is strong, investment is accelerating.
Operating cash flow was $1.71 billion. That is 139% of net earnings. Free cash flow, however, was $1.23 billion, down from $1.90 billion a year earlier. The decline is 35.2%. The reason is capital spending. The company spent $481 million in the quarter, more than double the $212 million a year earlier. It also made a $500 million voluntary pension contribution. The full-year capital spending target of 3.5-4% of revenue was maintained. The ratio was only 2.2% in the first nine months, so a sharp increase is coming in the fourth quarter. CFO Kim Kuryea said spending will likely stay elevated in 2027. Net debt fell to $2.63 billion from $5.68 billion at the start of the year. Our cash flow guide explains why free cash flow matters.
In January, watch one line: Marine margin.
The company will give its 2027 guidance in late January with fourth-quarter results. Danny Deep becomes CEO on January 1, 2027. Phebe Novakovic stays on as executive chair. Full-year guidance implies about 1% revenue growth in the fourth quarter. In Technologies, management said the fourth quarter will be a little softer. It tied this to the strength of the third quarter and expects mid-single-digit growth for the year. Mission Systems booked the highest quarterly orders in its history. The real test will therefore be the 2027 numbers. Here is the rule for readers: in January, look at the Marine Systems margin. If it stays above 7.5%, shipyard efficiency is durable and the backlog will turn into profit quickly. If it falls below 7%, this quarter's jump was a one-off. For a step-by-step approach, see this guide.
Looking Ahead
Strengths and Risks
5 Strengths · 6 RisksStrengths
5- Backlog doubled from a year earlier to $220.3 billion.
- Revenue grew year over year in all four segments.
- The Aerospace margin widened 1.2 points to 14.5%.
- Net debt fell $3.05 billion since the start of the year to $2.63 billion.
- Full-year earnings guidance was raised for the third time in 2026.
Risks
6- Part of the Marine margin gain came from a one-time Virginia Block IV adjustment.
- The Combat Systems margin contracted 1.1 points due to the shift to development programs.
- Free cash flow fell 35.2% year over year as capital spending rose.
- Full-year guidance implies only about 1% revenue growth in the fourth quarter.
- Middle East customers are cautious about placing Gulfstream orders.
- A delivery gap is expected in 2027 during the transition from the G280 to the G300.
What to Watch
5- Coming months: Delivery of the last Virginia Block IV submarine is expected.
- January 1, 2027Danny Deep becomes CEO and Phebe Novakovic becomes executive chair.
- Late January 2027The first 2027 guidance will come with fourth-quarter results.
- End of 2028Delivery of the first Columbia-class and first Virginia VPM submarines is targeted.
- 2030Gulfstream targets 200 aircraft deliveries per year.
Upcoming Earnings
To Understand This