Is General Dynamics Corporation (GD) overvalued?
On Equity Rank's model estimate, GD trades 16% below its fair value. General Dynamics Corporation (GD) last closed at $354.06; the multi-method model fair value is $419.79.
| Price | Model fair value | Price vs model |
|---|---|---|
| $354.06 | $419.79 | 16% below |
What the answer rests on
- 6 of 12 valuation methods put GD's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, GD's free cash flow would need to grow about 1.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 4.5% a year.
- GD trades at 21.5 times its last year's earnings, against a median of 31.8 for 37 profitable Aerospace & Defense companies.
- Over the past year the price sat below the model fair value on 52% of trading days. The gap ranged from 19% below to 29% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind GD's fair value · What prices assume · Other companies