General Dynamics NYSE: GD reported third-quarter 2026 results marked by double-digit growth in revenue, earnings and backlog, prompting the defense contractor to raise its full-year earnings forecast for the third time this year.
The company posted diluted earnings per share of $4.49 on revenue of $14.57 billion. Revenue rose 12.9% from the prior-year quarter, while operating earnings increased 14.7% to $1.53 billion and net earnings climbed 16.1% to $1.23 billion. Companywide operating margin improved 20 basis points to 10.5%.
Chairman and Chief Executive Officer Phebe Novakovic described the period as “even better” than the company’s already strong second quarter. General Dynamics said it exceeded consensus expectations by $0.37 per share, supported by higher-than-anticipated revenue and operating earnings.
Record Orders Drive Backlog to $220 Billion
General Dynamics recorded nearly $99 billion in new orders during the quarter, lifting backlog to a record $220 billion—double the year-ago level. Total estimated contract value, including options and indefinite-delivery, indefinite-quantity contracts, reached $271 billion.
Marine Systems accounted for much of the order activity. Electric Boat received awards totaling $29.5 billion for five additional Columbia-class submarines under Build II and $42.1 billion for nine additional Virginia-class submarines under Block VI.
Chief Financial Officer Kim Kuryea said overall Defense segment book-to-bill was 8.5 times for the quarter. Aerospace posted dollar-based book-to-bill of 1.4 times, while new aircraft orders during the first nine months of 2026 were more than 30% above the prior-year period.
“These results reflect the strength of demand across our businesses,” Kuryea said.
Marine Systems Leads Revenue and Profit Growth
Marine Systems revenue increased 21% year over year, driven primarily by construction activity on Columbia-class and Virginia-class submarines, followed by DDG-51 destroyer and T-AO ship construction. Segment earnings rose 34.4%, with operating margin improving 80 basis points.
Novakovic said the shipyards made measurable productivity gains, particularly at Electric Boat, where earned hours increased significantly in the second and third quarters. President Danny Deep said throughput increased across all shipyards as the company works toward “delivering more ships faster.”
Deep said Electric Boat expects to deliver the final Block IV Virginia-class submarine within the next several months. The company is targeting delivery of the first Columbia-class submarine and the first Virginia-class submarine equipped with the Virginia Payload Module by the end of 2028.
Marine Systems’ third-quarter margin also benefited from a one-time cumulative catch-up adjustment associated with strong performance on Virginia Block IV. Excluding that adjustment, Deep said segment performance remained better than during the first half of the year. He described the mid-7% margin range as a baseline, with opportunity for further improvement as production performance advances.
Aerospace Gains From Gulfstream Deliveries and Services
Aerospace revenue rose 9.3% to $3.54 billion, while operating earnings increased $83 million to $513 million. Segment operating margin expanded 120 basis points to 14.5%.
Gulfstream delivered 40 aircraft during the quarter, one more than a year earlier, and benefited from a slightly more favorable aircraft mix. The business also posted increased services revenue, as did Jet Aviation.
Deep said Gulfstream continued to realize manufacturing and completions efficiency gains, particularly on the G700 and G800 programs. The company delivered its 33rd G800 during the quarter.
Management cited active interest across its aircraft lineup in the U.S., Western Europe and Southeast Asia. Novakovic said customers in the Middle East remained active in the sales pipeline but were slower to place orders amid the geopolitical environment.
Looking longer term, Deep said General Dynamics intends to deliver 200 Gulfstream aircraft in 2030. Achieving that target will require production of more than 200 aircraft in 2029, he said. The company has the workforce, facilities and production capacity to support that level, though further expansion beyond 200 annual deliveries would require additional investments if demand supports it.
Combat and Technologies Continue to Expand
Combat Systems revenue grew 6% to $2.39 billion, although operating earnings declined by $5 million as operating margin contracted 110 basis points. The margin pressure was largely tied to a transition from legacy production programs to new development programs at Land Systems.
European Land Systems revenue rose 28% year over year, according to Deep, while Ordnance and Tactical Systems benefited from growing demand for medium- and large-caliber munitions and propellants. Management said demand for wheeled and tracked vehicles is being supported primarily by U.S. allies and a heightened threat environment.
Technologies revenue increased 10.8% to $3.7 billion, with General Dynamics Information Technology leading growth. Segment operating earnings rose 5.8% to $346 million, though margin declined 40 basis points due largely to business mix. Technologies posted quarterly book-to-bill of 1.4 times, and Mission Systems recorded its highest-ever quarterly orders.
Raised Outlook and Cash Generation
General Dynamics raised its 2026 diluted EPS outlook to a range of $17.20 to $17.30, from its prior guidance of $16.80 to $16.90. The forecast contemplates revenue of $56.5 billion to $56.8 billion and companywide operating margin of about 10.5%.
The company generated $1.7 billion in operating cash flow during the quarter and more than $5.7 billion in the first nine months. Free cash flow totaled $1.2 billion in the quarter and $4.8 billion year to date. General Dynamics continues to expect full-year free-cash-flow conversion of roughly 105%, with potential upside depending on fourth-quarter capital-project spending.
Capital expenditures totaled $481 million in the third quarter, and Kuryea said investment is expected to accelerate in the fourth quarter, particularly at shipyards. The company repaid $1 billion in maturing notes during 2026, ending the quarter with approximately $4.4 billion in cash and net debt of $2.6 billion.
Novakovic also said the call would be her final earnings call as CEO. She will remain Executive Chair and work with Deep, his team and the board.
About General Dynamics (NYSE:GD)
General Dynamics Corporation NYSE: GD is a global aerospace and defense company that develops, manufactures and supports products and services for government and commercial customers. Its operations serve the U.S. government, allied nations and other customers worldwide, with a significant focus on national security, military modernization and mission support.
The company operates through four primary business areas. Aerospace provides Gulfstream business jets and related aircraft services through Gulfstream Aerospace, as well as aircraft management, charter, maintenance and completions services through Jet Aviation.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider General Dynamics, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and General Dynamics wasn't on the list.
While General Dynamics currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
A strong long-term portfolio starts with companies that can survive recessions, inflation, changing consumer habits, and shifting market leadership.
This report names seven blue-chip stocks across technology, retail, consumer staples, healthcare, networking, sporting goods, and utilities that offer investors a mix of stability, income, growth, and staying power.
Get This Free Report
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
