General Dynamics Stock (GD) Has Eyes On Breakout – Earnings Could Prove Pivotal

General Dynamics stock (NYSE:GD) is threatening a breakout to new highs ahead of earnings, off the back of a strong year in the markets. The stock has added 39.63% over the past 12 months, with the chart up and to the right.

Unsurprisingly after such a rally, expectations are high leading in, with consensus looking for $4.10 EPS on $13.73B revenue, both modestly above the implied Q4 guidance midpoint embedded in the full-year frame, creating limited room for surprise unless segment execution materially exceeds the trajectory established through Q3.

The setup reflects a year in which General Dynamics trained the market to expect steady beats following a Q4 2024 stumble that reset FY2025 expectations downward. After missing Q4 2024 EPS by approximately 2% and guiding conservatively for 2025, the company delivered consecutive beats in Q1 through Q3 2025, with surprises ranging from 4.3% to 5.8%.

The stock has responded positively and sits within 2% of its 52-week high of $369.70, supported by robust defense contract wins including a $988 million U.S. Navy C5ISR modernization award announced earlier this month.

What the Q4 result will determine is whether the company can sustain margin traction across its four segments while articulating a credible FY2026 framework that justifies the current 23.6x P/E multiple.

At a 40% discount to the aerospace and defense industry average of 41.7x, General Dynamics trades as if execution risk remains despite three consecutive quarters of upside.

The quarter must resolve whether that discount reflects lingering skepticism about Gulfstream delivery normalization and submarine throughput, or whether it represents valuation support ahead of a margin expansion cycle.

Consensus Estimates

The Q4 consensus of $4.10 EPS on $13.73B revenue sits modestly above the implied guidance midpoint embedded in management’s October full-year frame of $15.30–$15.35 EPS. With Q1–Q3 2025 delivering $11.28 in cumulative EPS, the guidance range implies Q4 should land between $4.02 and $4.07, creating a narrow 3–7 cent cushion for consensus to clear the high end of management’s expectations. Revenue estimates reflect a 3.0% year-over-year increase, driven primarily by Marine Systems growth in submarine programs, though this masks expected weakness in Aerospace where operating earnings are projected to decline from $585 million to $493.55 million year-over-year.

Management Guidance and Commentary

“We are raising our full-year 2025 guidance to reflect the strong performance we’ve delivered through the first three quarters. We now expect earnings per share of $15.30 to $15.35, up from our prior range, and revenue of approximately $52.0 billion.”

Management’s October 2025 guidance raise followed three consecutive quarterly beats and represented the clearest signal that the conservative FY2025 posture established after Q4 2024’s delivery shortfall was no longer operative. The raised EPS midpoint of $15.33 implied Q4 would need to deliver approximately $4.05 EPS, below the current consensus of $4.10 but above the company’s historical pattern of guiding to achievable rather than stretch targets. The revenue guidance of approximately $52.0 billion sits roughly in line with the current full-year consensus of $51.95 billion, suggesting management sees Q4 revenue tracking close to Street expectations.

The gap between management’s Q4 implied guidance and consensus creates asymmetric risk. If General Dynamics merely meets the high end of its own full-year frame with $4.07 EPS, the result would represent a 3-cent miss versus Street expectations despite constituting a technical guidance beat. This dynamic has played out repeatedly in 2025: Q1 beat consensus by 5.8% yet the stock declined 3.5% as investors focused on order intake rather than the quarterly print. Q2’s 5.4% beat drove a 5% stock gain, but only because submarine contract modifications provided forward visibility. Q3’s 4.3% beat lifted shares 4%, supported by the simultaneous guidance raise that reduced uncertainty around the second-half trajectory.

Analyst Price Targets & Ratings

Wall Street maintains a positive stance on General Dynamics with 80% of analysts rating shares a Buy or Strong Buy. The consensus target of $393.01 implies 8.1% upside from current levels, though this relatively modest target reflects the stock’s recent outperformance and proximity to 52-week highs. The lack of Sell ratings suggests analysts view the current valuation as reasonable despite the stock’s 38.8% one-year return.

Sector & Peer Comparison

General Dynamics trades at a 23.6x P/E multiple, sitting between the pure-play defense primes and reflecting the company’s diversified exposure across defense and commercial aerospace through Gulfstream. The company’s 8.2% profit margin trails most peers, which explains the valuation discount despite strong recent execution. The forward P/E of 21.0x suggests the market expects modest earnings growth acceleration.

Earnings Track Record

General Dynamics has beaten consensus EPS estimates in 14 of the last 18 quarters, establishing a 77.8% beat rate with an average surprise of 1.9%. The pattern shows clear bifurcation: the company missed four consecutive quarters from Q4 2023 through Q3 2024, then delivered four consecutive beats from Q4 2024 through Q3 2025. This inflection aligns precisely with management’s conservative FY2025 guidance reset following the Q4 2024 report.

Post-Earnings Price Movement History

General Dynamics exhibits muted post-earnings price reactions, with an average next-day move of 1.3% across recent quarters. Counterintuitively, the stock has averaged a 1.7% gain following misses versus only 1.2% following beats, reflecting the market’s tendency to focus on forward guidance and backlog commentary rather than the quarterly print itself. The largest positive reaction came after Q3 2025, when the stock gained 2.6% following a 4.3% earnings beat paired with guidance raise.

Expected Move & Implied Volatility

The options market is pricing a 2.8% expected move for General Dynamics following the Q4 earnings report, translating to a range of $353.37 to $373.71 from the current price of $363.54. This implied move sits above the company’s average historical post-earnings reaction of 1.3%, suggesting options traders are positioning for greater volatility than the stock has typically delivered.

Expert Predictions & What to Watch

Key Outlook: Cautiously Bullish

Key Metrics to Watch

The Q4 result will be evaluated primarily through the lens of whether it supports or challenges the FY2026 earnings growth narrative. With the stock trading at 23.6x trailing earnings and near 52-week highs, investors have already priced in a return to normalized execution.

The quarter must deliver evidence that Aerospace margins are stabilizing, Marine Systems throughput gains are sustainable, and the defense budget environment supports continued backlog growth. If all three conditions are met and management guides FY2026 EPS above $17.50, the stock can sustain its recent momentum and potentially close the valuation gap with higher-multiple peers and move on to new highs.