General Dynamics Nuclear Submarine Awards Drive Q3 Backlog to Record High

General Dynamics Corp (NYSE:GD) last week reported its third-quarter results.

The biggest takeaway from the company’s quarterly earnings "was the substantial strengthening of its long-term revenue visibility," according to BTIG.

The General Dynamics Analyst: BTIG analyst Andre Madrid reiterated a Neutral rating on the stock.

The General Dynamics Thesis: Major nuclear submarine orders drove the company’s backlog to a record $220 billion, Madrid said in the note.

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The Navy awarded General Dynamics $42.1 billion for nine additional Block VI Virginia-class submarines and $29.5 billion for five additional Columbia-class submarines, the analyst stated.

Due to these orders, the company’s backlog doubled year over year to an all-time high of $220 billion, he added.

Companywide book-to-bill (BTB) improved to 6.8x, with Marine Systems (MS) recording a BTB of 17.5x in the quarter, Madrid said. He noted the performance of the other segments:

• Aerospace BTB was 1.5x and backlog grew 23% year over year.
• Combat Systems (CS) backlog grew 53% year over year and was the only segment in which BTB was less than 1.0x (recorded BTB of 0.7x, the lowest since the third quarter of 2021).
• Technologies BTB was 1.4x with backlog up 15%.

General Dynamics maintains a conservative capital allocation strategy, prioritizing dividends and buybacks to offset dilution, with no changes expected post-CEO transition, the analyst stated. M&A remains focused on core markets, as defense consolidation tilts toward smaller firms, he added.

Unfazed by higher fuel costs, Gulfstream demand remains strong globally, except in the Middle East, Madrid noted.

General Dynamics expects deliveries to shift toward large-cabin models in 2027, with G280 deliveries ending in the second quarter of 2027 and G300 deliveries ramping up in late 2027 or early 2028, the analyst said.

"Beyond that, we expect aircraft deliveries to ramp significantly through 2028-2030, exiting the decade at over 200 aircraft per year," he further wrote.

GD Stock Price Activity: General Dynamics shares are trading lower by 0.67% at $370.09 at the time of publication on Monday, according to Benzinga Pro data.

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