General Dynamics CEO Sold $16.39 Million in Shares

By Grace Kim

$16,391,481.26: General Dynamics (NYSE: GD) CEO Phebe Novakovic sold 45,353 shares at an average $361.42 in a transaction dated Thursday, Nov. 5, according to a Securities and Exchange Commission (SEC) filing.

After the sale, Novakovic owned 766,457 shares, valued at approximately $277,012,888.94. A link provided access to the legal filing with the SEC.

Takeaway: The sale cut Novakovic’s ownership by 5.59% but left her with shares worth about $277 million.

How did the stock trade?

On Monday, General Dynamics shares rose 2.2%, or $7.88, to $361.94. Trading volume reached 922,621 shares, below the stock’s 1,303,250-share average.

The 50-day moving average (average price over 50 trading days) stood at $349.76, while the 200-day stood at $355.05. The $361.94 price topped both measures. The 12-month low was $306.77 and the high was $400.00.

• Market capitalization (value of outstanding shares) was $97.80 billion. The P/E ratio (price divided by earnings) was 21.29; PEG ratio (price/earnings relative to growth) 1.99; and beta (sensitivity to broad market moves) 0.30.
• Debt-to-equity (debt relative to equity) was 0.23. The quick ratio (liquid assets versus near-term liabilities) was 0.94, and the current ratio (current assets versus current liabilities) was 1.43.

Takeaway: The shares rose above both moving averages on below-average volume but remained below the 12-month high.

What did the October earnings show?

On Friday, Oct. 30, General Dynamics reported quarterly EPS (earnings per share) of $4.49, beating the analyst consensus (average estimate) of $4.12 by $0.37.

Revenue reached $14.57 billion, above the $13.72 billion analyst estimate. The same quarter last year produced $3.88 of EPS, while quarterly revenue rose 12.9% year over year (versus the same period).

Net margin (profit as a share of revenue) was 8.24%, and return on equity (profit relative to shareholders’ equity) was 17.60%. Sell-side analysts expect $17.29 in EPS for the current fiscal year.

Takeaway: The quarter beat consensus on both sales and profit, while analysts carry a $17.29 full-year EPS estimate.

Who changed institutional positions?

Institutional investors and hedge funds own 86.14% of General Dynamics stock. Five named firms recently adjusted positions, and each reported an increase:

• Whipplewood Advisors LLC increased its position 1,725.0% in the first quarter. It bought 69 additional shares and ended with 73 shares valued at $25,000.
• 10Elms LLP raised its stake 85.4% in the third quarter, acquiring 35 shares. It now holds 76 shares worth $25,000.
• Wellington Altus USA Inc. increased its position 77.8% in the second quarter with 35 additional shares. It now owns 80 shares valued at $27,000.
• Downshift Financial LLC lifted its stake 134.3% in the third quarter by buying 47 shares. It now holds 82 shares worth $27,000.
• Morton Brown Family Wealth LLC lifted its position 182.8% in the third quarter with 53 additional shares. It now owns 82 shares valued at $27,000.

Takeaway: The percentage increases were large, but the disclosed portfolios remained small, ranging from 73 to 82 shares and $25,000 to $27,000.

Where do analyst targets stand?

Five firms changed or restated views on General Dynamics:

• On Tuesday, Nov. 3, Morgan Stanley raised its price target (analyst forecast for the share price) from $465 to $480. In its research note, the firm wrote: “overweight.”
• On Monday, Sept. 28, Weiss Ratings restated a buy (b) rating.
• On Tuesday, Nov. 3, Sanford C. Bernstein raised its price objective from $365 to $386 and assigned a market perform rating.
• On Monday, Nov. 2, Royal Bank of Canada raised its target from $360 to $400 and assigned a sector perform rating.
• On Friday, Oct. 9, TD Cowen cut its target from $420 to $380 and set a buy rating.

Eleven analysts have assigned Buy ratings, five Hold ratings and one Sell rating. MarketBeat’s consensus is “Moderate Buy,” with a $408.94 consensus target.

Takeaway: Ratings remained split, with target revisions moving both higher and lower despite the Moderate Buy consensus.

What does General Dynamics make?

General Dynamics is an aerospace and defense company that develops and manufactures products and provides services for commercial, government and military customers. Its businesses span aerospace, marine systems, combat systems and defense technologies.

• Aerospace: The company makes Gulfstream business jets and provides aircraft services.
• Marine systems: It designs and builds submarines and surface ships.
• Combat systems: It produces military vehicles, weapons systems and munitions.

Takeaway: The operating mix spans business aircraft, submarines, surface ships, military vehicles, weapons systems and munitions.