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General Dynamics’ $131 Billion Backlog: Is This Defense Giant Still Undervalued?

General Dynamics reported a strong first quarter for fiscal 2026, with revenue of $13.5 billion, representing a 10.3% year-over-year increase, and net earnings of $1.125 billion, up 13.2% compared to the same quarter last year. Earnings per diluted share increased 12% to $4.10, with operating margins improving slightly by 10 basis points to 10.5%. Each of the company’s four segments—Aerospace, Combat Systems, Marine Systems, and Technologies—contributed to this positive momentum, with Marine Systems leading operating earnings growth (+26.4%) on improved shipyard productivity and increased throughput. The Aerospace segment delivered $3.3 billion in revenue and operating earnings of $493 million, benefiting from a record number of first-quarter Gulfstream aircraft deliveries (38 units) and margin expansion driven by operational efficiencies, particularly with the newer G800 model outperforming its predecessor. While order activity remained strong overall, there was a noted slowdown in Middle Eastern demand toward the quarter’s end tied to geopolitical uncertainties.