Fears over theFalls Church, VA-based global aerospace and defense company's business jets have dragged down General Dynamics' valuation recently, Barclays said. General Dynamics operates a jetliner brand, Gulfstream, as a subsidiary.
"Gulfstream is only part of the overall GD story, which offers growth and margin improvement in the company's defense businesses," the firm added.
Additionally, General Dynamics offers the best risk and reward in the U.S. aerospace and defense group, Barclays said.
The firm downgraded other defense stocks such as LockheedMartin Corp. (LMT) and Raytheon Company (RTN) on Monday.
Shares of General Dynamics closed up 0.62% to $146.46 on Monday.
Separately, TheStreet Ratings team rates GENERAL DYNAMICS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
We rate GENERAL DYNAMICS CORP (GD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GD's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 3.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GENERAL DYNAMICS CORP has improved earnings per share by 11.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GENERAL DYNAMICS CORP increased its bottom line by earning $7.83 versus $7.03 in the prior year. This year, the market expects an improvement in earnings ($9.05 versus $7.83).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $696.00 million to $733.00 million.
- After a year of stock price fluctuations, the net result is that GD's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: GD
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.