A Member of Pat McKeough’s Inner Circle recently asked for his advice on General Dynamics, a global aerospace and defense company delivering business jets, nuclear submarines, armored vehicles, and secure communication and IT systems to government and commercial customers worldwide.
Pat likes powerful combination of growth visibility, operational momentum, and strategic positioning in priority defense domains including a $109.9 billion. The company’s role as a critical defense supplier also gives it a formidable moat.
General Dynamics Corp. (Symbol GD on New York; www.gd.com) is a global aerospace and defense company.
General Dynamics offers a broad portfolio of products and services in business aviation; ship construction and repair; land vehicles, weapons systems, and munitions; and technology products and services.
The company’s main customer is the U.S. government (about 69% of sales). This includes the Department of Defense, the intelligence community and other U.S. government agencies. General Dynamics also does significant business with non-U.S. government agencies (10%) and corporate and individual buyers of business jet aircraft and related services (21%).
The company operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The last three segments are its defence segments.
The Aerospace segment (about 24% of sales) produces business jets. It’s a leader in new technology aircraft, aircraft repair, customer support and custom completion services. The segment consists of the company’s Gulfstream and Jet Aviation business units.
The Marine Systems segment (30%) is the leading designer and builder of nuclear-powered submarines. It’s also a leader in surface combat and auxiliary ship design and construction for the U.S. Navy. Plus, it provides maintenance, modernization, and lifecycle support services for Navy ships.
The Combat Systems segment (19%) provides wheeled and tracked combat vehicles, weapons systems, and munitions. It consists of three business units: Land Systems, European Land Systems, and Ordnance and Tactical Systems.
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The Technologies segment (28%) provides a full spectrum of services, technologies, and products to military, intelligence, federal civilian and state customers.
General Dynamics’ revenue has increased steadily since the pandemic in 2020, thanks to expanding demand for its defence products and a substantial increase in aircraft deliveries. Revenue climbed 11.5%, from $37.93 billion in 2020 to $42.27 billion in 2023. Revenue then jumped 12.9% in 2024 to $47.72 billion.
Earnings rose 2.8%, from $3.17 billion, or $11.04 a share, in 2020 to $3.26 billion, or $11.61 a share, in 2021, as the company’s Technologies segment saw strong sales. In 2022, earnings increased 4.1%, to $3.39 billion, or $12.31 a share, as the Aerospace segment outperformed past years. Earnings then dropped 2.2% in 2023 to $3.32 billion, or $12.14 a share, as the Marine segment suffered from supply-chain problems. In 2024, earnings rebounded, rising 14.1% to $3.78 billion, or $13.81 a share, on higher volumes of aircraft deliveries.
General Dynamics’ demand from both military and commercial customers remains strong
In the three months ended September 30, 2025, General Dynamics’ revenue jumped 10.6%, to $12.91 billion from $11.67 billion a year earlier. Revenue was higher due to a 30.3% increase in Aerospace revenue, to $3.23 billion from $2.48 billion.
General Dynamics earned $1.06 billion, or $3.93 a share, in the latest quarter. That was up 13.9% from $930 million, or $3.39 a share, a year earlier.
The company raised its quarterly dividend by 5.6% with the May 2025 payment, to $1.50 a share from $1.42. The stock yields a solid 1.6%.
Ongoing global tensions should continue to increase defence spending. The company is actively preparing to meet the rising demand. For example, it has invested in its Marine Systems to support significant growth in U.S. Navy ship and submarine construction over the next two decades.
Meanwhile, General Dynamics’ Aerospace segment gives the company diversification beyond defence. The outlook for the business jet market is positive, and the company has invested in an all-new lineup of business jet aircraft.
The stock trades at a reasonable 21.0 times the $17.28 a share that General Dynamics is forecast to earn in 2026.
Recommendation in Pat’s Inner Circle: General Dynamics Corp. is a buy.
