General Dynamics (GD): Should You Buy, Sell, or Hold After Q4 Results?

General Dynamics: Recent Performance and Investor Considerations

Over the last half-year, General Dynamics has outperformed the S&P 500 by 7.7%, with its stock price climbing to $365.83—a 13.5% increase. This upward trend was fueled in part by strong quarterly earnings, prompting investors to consider their next move regarding the stock.

Should you consider adding General Dynamics to your portfolio now, or is caution warranted?

Why We Remain Cautious on General Dynamics

While shareholders have benefited from recent gains, we remain reserved about General Dynamics’s prospects. Below are three key reasons for our lack of enthusiasm, along with an alternative stock we prefer.

1. Modest Long-Term Revenue Expansion

Consistent revenue growth over time is a hallmark of high-quality companies. Although any business can see short-term spikes, the best performers sustain momentum for years. Unfortunately, General Dynamics’s sales have grown at an average annual rate of just 6.7% over the past five years, which falls short of our expectations for the industrial sector.

General Dynamics Quarterly Revenue

2. Slowing Revenue Outlook

Analyst forecasts can provide insight into a company’s future trajectory. While projections are not always precise, accelerating growth tends to lift valuations, whereas slowing growth can have the opposite effect.

Looking ahead, analysts anticipate General Dynamics’s revenue will grow by only 4.1% over the next year—a slowdown compared to its 6.7% compound annual growth rate over the previous five years. This tepid outlook suggests the company may encounter headwinds in generating demand for its offerings.

3. Limited EPS Growth

Examining long-term changes in earnings per share (EPS) helps determine whether a company’s revenue gains are translating into real profitability. Sometimes, sales can be boosted by heavy spending on marketing, which doesn’t always benefit the bottom line.

General Dynamics has posted a 7% annual increase in EPS over the last five years, mirroring its revenue growth. This indicates the company has maintained its profit per share as it expanded, but the growth rate remains unremarkable.

General Dynamics Trailing 12-Month EPS (Non-GAAP)

Our Verdict

While General Dynamics is a solid company, it doesn’t make our list of top picks. Despite its recent outperformance and a forward P/E ratio of 22.4 (with shares at $365.83), the potential for further gains appears limited relative to the risks. We believe there are more attractive investment opportunities available at this time. For example, consider a leading digital advertising platform thriving in the creator economy.

Stocks We Prefer Over General Dynamics

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Our selections have included well-known names like Nvidia (up 1,326% from June 2020 to June 2025) and lesser-known companies such as Kadant, which achieved a 351% five-year return. Start your search for the next breakout stock with StockStory today.