Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
General Dynamics Corp., current price multiples
| General Dynamics Corp. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | ||
|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||
| Current share price (P) | $132.43 | ||||||||
| No. shares of common stock outstanding | 286,972,150 | ||||||||
| Growth rate (g) | 18.26% | ||||||||
| Earnings per share (EPS) | $12.14 | ||||||||
| Next year expected EPS | $14.36 | ||||||||
| Operating profit per share | $16.20 | ||||||||
| Sales per share | $137.12 | ||||||||
| Book value per share (BVPS) | $47.31 | ||||||||
| Valuation Ratios (Price Multiples) | |||||||||
| Price to earnings (P/E) | 10.91 | 80.41 | 42.76 | 41.56 | 37.24 | 14.33 | 23.25 | 37.04 | |
| Price to next year expected earnings | 9.22 | 15,692.57 | 32.36 | 38.07 | 36.60 | 12.54 | 17.00 | 36.29 | |
| Price-earnings-growth (PEG) | 0.60 | — | 1.33 | 4.54 | 21.39 | 1.01 | 0.63 | 17.97 | |
| Price to operating profit (P/OP) | 8.18 | 35.50 | 34.06 | 32.61 | 29.42 | 12.16 | 15.09 | 26.81 | |
| Price to sales (P/S) | 0.97 | 1.70 | 5.94 | 6.19 | 7.66 | 1.81 | 1.55 | 2.81 | |
| Price to book value (P/BV) | 2.80 | 27.86 | 17.82 | 8.74 | 17.35 | 4.87 | 17.36 | 3.82 | |
Based on: 10-K (reporting date: 2019-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
General Dynamics Corp., historical price multiples
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
An analysis of the valuation multiples from 2015 through 2019 reveals a synchronized trend across all measured ratios. Market valuation experienced a period of expansion between 2015 and 2017, followed by a notable contraction in 2018 and relative stabilization in 2019.
- Price to Earnings (P/E) Ratio
- The P/E ratio exhibited a steady increase from 13.88 in 2015 to a peak of 21.37 in 2017. This expansion suggests a period of increased investor confidence or a rise in the stock price that outpaced earnings growth. A significant correction occurred in 2018, with the ratio dropping to 14.95, before ending the period at 15.48 in 2019.
- Price to Operating Profit (P/OP) Ratio
- The P/OP ratio closely mirrored the P/E trajectory, rising from 9.85 in 2015 to a high of 14.90 in 2017. A downward adjustment followed in 2018 to 11.22, with a marginal increase to 11.61 observed by the end of 2019.
- Price to Sales (P/S) Ratio
- Valuation relative to revenue grew from 1.31 in 2015 to a peak of 2.01 in 2017. By 2018, the ratio reverted to 1.38 and remained nearly flat at 1.37 in 2019, indicating that the valuation multiple relative to sales returned to levels seen at the start of the analyzed period.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio increased from 3.83 in 2015 to a peak of 5.44 in 2017. Unlike the other ratios which stabilized in 2019, the P/BV ratio showed a consistent decline following the 2017 peak, falling to 4.26 in 2018 and further to 3.97 in 2019.
The consistency of the peak in 2017 across all four metrics indicates a broad revaluation of the equity during that window. The subsequent decline suggests a systemic adjustment in market pricing relative to the company's fundamental earnings, sales, and book value.
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Price to Earnings (P/E)
General Dynamics Corp., historical P/E calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 289,627,333 | 288,235,928 | 296,933,621 | 302,742,234 | 311,161,810 | |
| Selected Financial Data (US$) | ||||||
| Net earnings (in millions) | 3,484) | 3,345) | 2,912) | 2,955) | 2,965) | |
| Earnings per share (EPS)2 | 12.03 | 11.61 | 9.81 | 9.76 | 9.53 | |
| Share price1, 3 | 186.25 | 173.48 | 209.53 | 183.04 | 132.26 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 15.48 | 14.95 | 21.37 | 18.75 | 13.88 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
EPS = Net earnings ÷ No. shares of common stock outstanding
= 3,484,000,000 ÷ 289,627,333 = 12.03
3 Closing price as at the filing date of General Dynamics Corp. Annual Report.
4 2019 Calculation
P/E ratio = Share price ÷ EPS
= 186.25 ÷ 12.03 = 15.48
5 Click competitor name to see calculations.
An analysis of the financial performance and market valuation between 2015 and 2019 reveals a period of steady earnings growth contrasted by significant volatility in share price and valuation multiples.
- Earnings Per Share (EPS) Growth
- Earnings per share exhibited a continuous upward trend, increasing from 9.53 in 2015 to 12.03 in 2019. A notable acceleration in profitability occurred between 2017 and 2018, during which EPS rose from 9.81 to 11.61, representing a significant increase in bottom-line performance.
- Share Price Volatility
- The share price experienced a period of expansion followed by a correction. The price rose from 132.26 in 2015 to a peak of 209.53 in 2017. This peak was followed by a decline to 173.48 in 2018, before recovering to 186.25 by the end of 2019.
- Price-to-Earnings (P/E) Ratio Dynamics
- The P/E ratio shifted from 13.88 in 2015 to a high of 21.37 in 2017, indicating a period of increasing investor optimism and a higher premium applied to earnings. This trend reversed sharply in 2018, with the ratio dropping to 14.95. This contraction occurred despite the simultaneous increase in EPS, suggesting that the decrease in share price outweighed the gains in earnings. The ratio remained relatively stable in 2019 at 15.48.
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Price to Operating Profit (P/OP)
General Dynamics Corp., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 289,627,333 | 288,235,928 | 296,933,621 | 302,742,234 | 311,161,810 | |
| Selected Financial Data (US$) | ||||||
| Operating earnings (in millions) | 4,648) | 4,457) | 4,177) | 4,309) | 4,178) | |
| Operating profit per share2 | 16.05 | 15.46 | 14.07 | 14.23 | 13.43 | |
| Share price1, 3 | 186.25 | 173.48 | 209.53 | 183.04 | 132.26 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 11.61 | 11.22 | 14.90 | 12.86 | 9.85 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
Operating profit per share = Operating earnings ÷ No. shares of common stock outstanding
= 4,648,000,000 ÷ 289,627,333 = 16.05
3 Closing price as at the filing date of General Dynamics Corp. Annual Report.
4 2019 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 186.25 ÷ 16.05 = 11.61
5 Click competitor name to see calculations.
An analysis of valuation multiples reveals a period of expansion followed by a corrective phase between 2015 and 2019. While operating profit per share maintained a consistent upward trajectory, the share price experienced greater volatility, which directly influenced the Price to Operating Profit (P/OP) ratio.
- Share Price Trends
- The share price exhibited a strong growth trend from 2015 to 2017, rising from US$ 132.26 to a peak of US$ 209.53. A notable correction occurred in 2018, with the price declining to US$ 173.48, followed by a moderate recovery to US$ 186.25 by the end of 2019.
- Operating Profit per Share Performance
- Operating profit per share demonstrated steady growth over the five-year period, increasing from US$ 13.43 in 2015 to US$ 16.05 in 2019. Aside from a marginal dip in 2017, the overall trend reflects a consistent improvement in operational earnings capacity.
- Price to Operating Profit (P/OP) Ratio Dynamics
- The P/OP ratio expanded significantly from 9.85 in 2015 to a high of 14.90 in 2017, indicating that the market valuation grew at a faster rate than the underlying operating profits. This expansion reversed in 2018, where the ratio contracted to 11.22 as the share price fell while operating profits continued to rise. The ratio remained relatively stable at 11.61 in 2019, suggesting a normalization of the valuation multiple relative to the company's operational performance.
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Price to Sales (P/S)
General Dynamics Corp., historical P/S calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 289,627,333 | 288,235,928 | 296,933,621 | 302,742,234 | 311,161,810 | |
| Selected Financial Data (US$) | ||||||
| Revenue (in millions) | 39,350) | 36,193) | 30,973) | 31,353) | 31,469) | |
| Sales per share2 | 135.86 | 125.57 | 104.31 | 103.56 | 101.13 | |
| Share price1, 3 | 186.25 | 173.48 | 209.53 | 183.04 | 132.26 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 1.37 | 1.38 | 2.01 | 1.77 | 1.31 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
Sales per share = Revenue ÷ No. shares of common stock outstanding
= 39,350,000,000 ÷ 289,627,333 = 135.86
3 Closing price as at the filing date of General Dynamics Corp. Annual Report.
4 2019 Calculation
P/S ratio = Share price ÷ Sales per share
= 186.25 ÷ 135.86 = 1.37
5 Click competitor name to see calculations.
The Price to Sales (P/S) ratio exhibited a period of expansion followed by a significant correction and subsequent stabilization between 2015 and 2019.
- Price to Sales Ratio Trends
- The P/S ratio increased from 1.31 in 2015 to a peak of 2.01 by 2017, indicating a period of multiple expansion where the market attributed a higher valuation to each dollar of revenue. This trend reversed sharply in 2018, with the ratio falling to 1.38, and remained nearly stagnant at 1.37 in 2019.
- Share Price Movement
- The share price showed an upward trajectory from US$ 132.26 in 2015 to a maximum of US$ 209.53 in 2017. A subsequent decline occurred in 2018, with the price dropping to US$ 173.48, followed by a modest recovery to US$ 186.25 by the end of 2019.
- Sales per Share Growth
- Sales per share demonstrated a consistent and uninterrupted growth pattern throughout the analyzed period. Revenue per share climbed from US$ 101.13 in 2015 to US$ 135.86 in 2019. The most significant acceleration in sales growth occurred between 2017 and 2018, where sales per share increased from US$ 104.31 to US$ 125.57.
- Analysis of Valuation Divergence
- The contraction of the P/S ratio observed in 2018 was the result of two converging factors: a decrease in the market share price and a substantial increase in sales per share. By 2019, the stability of the ratio at 1.37 suggests that the market valuation of the stock had aligned with the underlying growth in revenue generation.
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Price to Book Value (P/BV)
General Dynamics Corp., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 289,627,333 | 288,235,928 | 296,933,621 | 302,742,234 | 311,161,810 | |
| Selected Financial Data (US$) | ||||||
| Shareholders’ equity (in millions) | 13,577) | 11,732) | 11,435) | 10,976) | 10,738) | |
| Book value per share (BVPS)2 | 46.88 | 40.70 | 38.51 | 36.26 | 34.51 | |
| Share price1, 3 | 186.25 | 173.48 | 209.53 | 183.04 | 132.26 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 3.97 | 4.26 | 5.44 | 5.05 | 3.83 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
BVPS = Shareholders’ equity ÷ No. shares of common stock outstanding
= 13,577,000,000 ÷ 289,627,333 = 46.88
3 Closing price as at the filing date of General Dynamics Corp. Annual Report.
4 2019 Calculation
P/BV ratio = Share price ÷ BVPS
= 186.25 ÷ 46.88 = 3.97
5 Click competitor name to see calculations.
The valuation analysis between 2015 and 2019 reveals a divergence between the steady growth of intrinsic book value and the volatility of market pricing. While the underlying equity value grew consistently, the market premium fluctuated, peaking in 2017 before entering a period of compression.
- Book Value per Share (BVPS)
- A consistent upward trajectory is observed in the book value per share, which grew monotonically from US$ 34.51 in 2015 to US$ 46.88 in 2019. This steady growth reflects a continuous increase in the company's net asset value on a per-share basis throughout the analyzed five-year period.
- Share Price Trends
- The share price demonstrated significant volatility relative to the book value. An initial sharp increase occurred from US$ 132.26 in 2015 to a peak of US$ 209.53 in 2017. This was followed by a correction to US$ 173.48 in 2018 and a subsequent partial recovery to US$ 186.25 by the end of 2019.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio exhibited a period of expansion from 2015 to 2017, rising from 3.83 to a peak of 5.44. This suggests that the market applied an increasing premium to the company's accounting value during this interval. Subsequently, a contraction is observed, with the ratio declining to 4.26 in 2018 and further to 3.97 in 2019, effectively returning the valuation multiple to levels near those seen at the start of the period despite the higher absolute book value.
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