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General Dynamics Corporation (NYSE:GD) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$233 at one point, and dropping to the lows of US$204. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether General Dynamics' current trading price of US$214 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at General Dynamics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for General Dynamics
Is General Dynamics Still Cheap?
Good news, investors! General Dynamics is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $306.40, but it is currently trading at US$214 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that General Dynamics’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of General Dynamics look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 28% over the next couple of years, the future seems bright for General Dynamics. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? Since GD is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on GD for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GD. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.