GD: Hold
Published 16 Sep 2026, 16:39 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
Stored financial statements changed; the revised figures need checking. The model version changed. The published model version has been replaced. Record the new calculation basis even if the rating is unchanged. A positive rating change needs a further five percentage points above its entry requirement.
A positive rating change needs a further five percentage points above its entry requirement.
Supporting evidence
Year-to-date profit has improved
Across 2 completed quarters since 2025-12-31, net income was 2,285.0m versus 2,008.0m in the matching prior-year periods (USD). Check whether the latest quarter changes that direction.
Capital earns more than at peers
Return on invested capital: 14.6% for GD, against 12.9% across 12 comparable peers.
Opposing evidence
The stock is lagging its sector
Over one year, the stock changed +9.1% against +13.7% for Industrials (XLI). The gap is -4.6 percentage points. These are price returns, before dividends.
The original scenarios
| Scenario | Sales growth | Profit margin | Model value |
|---|---|---|---|
| Weaker | 4.2% | 7.3% | $303.55 |
| Central | 9.2% | 8.1% | $396.43 |
| Stronger | 14.2% | 8.9% | $506.14 |
Method: Earnings and historical valuation. A sufficiently complete, positive earnings record allows the stock's own P/E history to be used. These scenarios are not probability intervals.
Original assumptions and checks
| eps | 16.39 |
|---|---|
| cash | 4333000000.0 |
| debt | 9479000000.0 |
| years | 1.1991786447638604 |
| growth | 9.18330324208053 |
| margin | 8.178852007801535 |
| profit | 4487000000.0 |
| cash_ok | True |
| debt_ok | True |
| growths | [10.590352154913884, 7.804768331084122, 10.292072322670375, 8.074534161490687] |
| revenue | 54861000000.0 |
| downside | 14.708534510046878 |
| leverage | 0.7792247122955784 |
| multiple | 21.99351911860013 |
| free_cash | 6447000000.0 |
| buy_hurdle | 15 |
| volatility | 22.46926678870827 |
| history_end | 2026-09-11 |
| reward_risk | 0.7741599329494362 |
| annual_years | 5 |
| usable_weeks | 157 |
| history_start | 2023-09-15 |
| history_weeks | 157 |
| financial_date | 2026-06-30 |
| interest_cover | 22.2078431372549 |
| operating_cash | 7705000000.0 |
| uncapped_growth | 9.18330324208053 |
| current_multiple | 21.714460036607687 |
| projected_margin | 8.095134852616276 |
| historical_margin | 8.011417697431018 |
Recent price · Passed. Weekly close dated 2026-09-11.
Suitable business model · Passed. Value operating cash flow or comparable earnings; deduct debt and other ownership claims where appropriate.
Four quarters · Passed. Four quarters ending 2026-06-30.
Current financials · Passed. Statements through 2026-06-30; factor prices dated 2026-09-11.
Annual record · Passed. 5 consecutive annual profit margins, including loss years.
Comparable earnings history · Passed. P/E is usable in 157 of 157 weeks. At least 52 usable weeks and 70% coverage are required; excluding too many loss or missing weeks would bias the target.
Earnings and price dates · Passed. Earnings-release EPS $16.39, for four quarters ending 2026-06-30.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Comparable sales growth · Passed. Growth uses the median of four quarterly year-on-year comparisons.
Positive statement earnings · Passed. Trailing statement profit is positive.
Earnings reconciliation · Passed. Release EPS is $16.39; statement-derived EPS is $16.58. The difference is within the 5% review threshold; this does not prove there are no unusual items.
Statement totals · Passed. The latest four quarters agree with the trailing snapshot within 5%.
Cash and borrowing · Passed. Cash generation, debt and interest-cover figures are available.
Target publication review · Passed. The model estimate is within SM's automatic publication range of one quarter to four times the current price. This is a review threshold, not evidence that the market price is correct.
Policy sm-review-2-research · Model sm-assessment-14-operating-capital · Data 1fefce83f179.