General Dynamics Profit Up 42% in Fourth Quarter
Thursday, January 24, 2008
General Dynamics said yesterday that higher sales of combat vehicles to the Army and corporate jets pushed fourth-quarter profit up 42 percent, but the defense contractor's 2008 outlook fell short of Wall Street forecasts.
Profit at the Falls Church company rose to $579 million ($1.42 a share) in the quarter, from $408 million ($1) in the fourth quarter of 2006. Analysts polled by Thomson Financial had expected $1.41 per share in profit.
Revenue rose 15 percent, to $7.52 billion, but missed Wall Street's estimate of $7.55 billion.
The company has replaced battle-worn equipment and is part of a partnership to build thousands of mine-resistant vehicles to protect troops in Iraq. Revenue in its combat systems division rose 46 percent, to $2.6 billion, in the fourth quarter.
Sales in its aerospace unit, which makes Gulfstream private jets, rose 17 percent, to $1.2 billion. Revenue from the marine systems division, which makes submarines and warships, rose 3 percent, to $1.2 billion. Information technology sales fell 2 percent, to $2.4 billion.
For all of 2007, General Dynamics said its profit rose, to $2.1 billion ($5.08) from $1.86 billion ($4.56) the previous year.
For 2008, the company forecast earnings of $5.55 to $5.65 per share, compared with the $5.73 per share expected by analysts.
Analysts largely dismissed the difference, noting that General Dynamics often makes cautious estimates early in the year only to boost them later.
"Given the firm's history of starting the year with an element of conservatism, we remain confident in our estimate and do not believe that investors should take fright in this range," Robert Stallard, an analyst with Banc of America Securities, wrote in a research note.
Shares of General Dynamics rose 20 cents yesterday, to $79.05.