General Dynamics Corporation

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker	Analyst	Analyst Email
Deutsche Bank Research	Myles Walton	myles.walton@db.com
Wolfe Research	Hunter K. Keay	hkeay@wolferesearch.com
Credit Suisse	Robert Spingarn	robert.spingarn@credit-suisse.com
Guggenheim Securities	Roman Schweizer	roman.schweizer@guggenheimpartners.com
RBC Capital Markets	Robert Stallard	robert.stallard@rbccm.com
CRT Capital Group	Peter Arment	peter.arment@bernstein.com
Bernstein Research	Douglas S. Harned	douglas.harned@bernstein.com
Cowen & Company	Cai von Rumohr	cai.von-rumohr@cowen.com
Wells Fargo Securities	Sam J. Pearlstein	sam.pearlstein@wellsfargo.com
Stifel Nicolaus	Joseph W. DeNardi	denardij@stifel.com
Jefferies	Howard A. Rubel	hrubel@jefferies.com
Buckingham Research	Richard Safran	rsafran@buckresearch.com

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Primary Input Data

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Derived Input Data

Derived Input	Label	2015 Value	2016 Value	Equational Form
Net Operating Profit Less Adjusted Taxes	NOPLAT	2,716	2,801	$NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)$
Free Cash Flow	FCF	1,930	1,806	$FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS$
Tax Shield	TS	(61)	27	$TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income$
Invested Capital	IC	19,552	20,026	$IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital$
Return on Invested Capital	ROIC	13.89%	13.99%	$ROIC\,=\,\frac { NOPLAT }{ IC }$
Net Investment	NetInv	(1,570)	928	$NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation$
Investment Rate	IR	-57.81%	33.13%	$IR\,=\,\frac {NetInv}{NOPLAT}$
Weighted Average Cost of Capital	WACC_Market	23.18%	19.72%	$WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)$
Weighted Average Cost of Capital	WACC_Book	9.01%	8.24%
Enterprise value	EV_Market	43,513	53,636	$EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash$
Enterprise value	EV_Book	43,105	52,870
Long-Run Growth	g = IR x ROIC	-8.03%	4.63%	Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
Long-Run Growth	g = % $\Delta$ GDP	2.50%	2.50%
Margin from Operations	M	13.28%	13.74%	$M\,\,=\,\,\frac{EBIT}{SALES}$
Depreciation/Amortization Rate	D	10.34%	9.53%	$D\,\,=\,\,\frac{D+A}{EBITDA}$

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form	Observed Value		Single-stage multiple g solution		Two-stage valuation model g solution
Equational Form	12/31/2015	12/31/2016	12/31/2015	12/31/2016	12/31/2015	12/31/2016
EV/SALES $\frac {EV}{Sales} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)$	1.38	1.71	30.76%	23.14%	26.03%	20.99%
EV/EBITDA $\frac {EV}{EBITDA} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)$	9.34	11.26	30.76%	23.14%	26.03%	20.99%
EV/NOPLAT $\frac {EV}{NOPLAT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}$	16.02	19.15	30.76%	23.14%	26.03%	20.99%
EV/FCF_OPS $\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	22.55	29.70	30.76%	23.14%	26.03%	20.99%
EV/EBIT $\frac {EV}{EBIT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	10.41	12.45	30.76%	23.14%	26.03%	20.99%
EV/IC $\frac {EV}{IC} \,= \,\frac{ROIC\, -\, g}{WACC\,-\,g}$	2.23	2.26	30.76%	23.14%	26.03%	20.99%

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