General Dynamics Beats Wall Street Estimates. The Stock Is Up.

General Dynamics stock closed up 6.5% Wednesday. (Angel Garcia/Bloomberg)

General Dynamics delivered better-than-expected second-quarter earnings. Wednesday morning, the company announced earnings per share of $3.74 from sales of $13 billion. Wall Street was looking for EPS of $3.55 from sales of $12.4 billion. A year ago, in the second quarter of 2024, General Dynamics reported EPS of $3.26 from sales of $12 billion.

The stock closed up 6.5% at $316.94, while the S&P 500 and Dow Jones Industrial Average added 0.8% and 1.1%, respectively.

“During the first half of the year, each of our four segments achieved growth in revenue and earnings, with margins on a companywide basis expanding 50 basis points over the same period last year,” said CEO Phebe Novakovic in a news release. “Our strong cash flow and healthy backlog position us well to have a good second half.”

Aerospace profit margins improved by more than two percentage points year over year, to 13.2%. Combat systems margins improved by 0.5 percentage point, to 14.2%.

Orders were strong, too. The book-to-bill ratio, defined as orders divided by revenue, was 2.2 to 1 in the quarter. Book-to-bill was 2.4 to 1 in defense and 1.3 to 1 in the company’s aerospace business. Total estimated contract value, the sum of all backlog components, ended the quarter at about $161 billion, up from $141 billion at the end of the first quarter.

Marine systems revenue was “particularly strong” wrote Vertical Research Partners analyst Rob Stallard on Wednesday. (General Dynamics makes nuclear-powered submarines, among other products.) “This was clearly a good operating quarter from the Marine division, while end market demand for Aerospace has remained robust. We would expect the shares to respond positively to these numbers.”

It was a solid quarter, and investors seem pleased. Coming into Wednesday trading, General Dynamics stock was up about 13% this year, about five percentage points ahead of the S&P 500.

Write to Al Root at allen.root@dowjones.com