This article originally appeared on The DIV-Net March 19, 2012.
Linked here is a detailed quantitative analysis of
General Dynamics (
GD). Below are some highlights from the above linked analysis:
Company Description: General Dynamics is the world's fifth largest military contractor and also one of the world's biggest makers of corporate jets.
Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:
1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number
GD is trading at a discount to only 3.) above. Since GD's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 7.1% premium to its calculated fair value of $67.05. GD did not earn any Stars in this section.
Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:
1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%
GD earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%.