GD
General Dynamics Corporation
$343.10
Cyclical & Capital-Intensive
70%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 27.1% above fair value
You pay
$343.10
Bear
$220.93
Fair
$270.03
Bull
$319.12
Bear
$220.93
-35.6%
$12.27 × 18x
Fair
$270.03
-21.3%
$12.27 × 22x
Bull
$319.12
-7.0%
$12.27 × 26x
Adjust Assumptions
22.0x
12.27$
Key Value Driver
Through-cycle normalized EPS ($12.27)
Implied Market Multiple
28.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (35 analysts)
$407.43
Divergence from AlphaVal
34%
Summary
Using 7-year normalized EPS of $12.27 at a 22x cycle multiple, the base-case value is $270.03 per share. P/TBV cross-check: 28.7x.
Warnings
Price-to-book value of 28.7x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $407.43 (from 35 analysts). Our estimate is 34% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing