Using an unlevered Free Cash Flow to Firm (FCFF) model, we project General Dynamics Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.1% to 3.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 95, DPO 32, DIO 77). At a 8.6% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 20.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $384.42 per share, suggesting GD is fairly valued by 8.0% at the current price of $355.88.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,665 | 4,879 | 5,081 | 5,253 | 5,414 | 5,549 |
| (−) Net Interest | 490 | 512 | 534 | 552 | 569 | 583 |
| (+) D&A | 996 | 1,069 | 1,107 | 1,198 | 1,295 | 1,328 |
| EBITDA | 6,151 | 6,460 | 6,721 | 7,003 | 7,278 | 7,460 |
| (−) Tax | 773 | 809 | 842 | 871 | 898 | — |
| (−) CapEx | 1,248 | 1,305 | 1,359 | 1,405 | 1,448 | — |
| (−) ΔWC | 2,571 | 911 | 863 | 736 | 686 | — |
| Free Cash Flow (FCF) | 1,559 | 3,435 | 3,657 | 3,991 | 4,247 | — |
| Peers' EBITDA Multiple | 20.1x | |||||
| Terminal Value | 149,797 | |||||
| WACC / Discount Rate | 8.56% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,497 | 3,036 | 2,978 | 2,993 | 2,934 | 99,326 |
| Enterprise Value | 112,764 | |||||
| Projection Period | 13,438 | 11.9% | ||||
| Terminal Value | 99,326 | 88.1% | ||||
| (−) Current Net Debt | 7,456 | |||||
| Equity Value | 105,308 | |||||
| (÷) Outstanding Shares | 274M | |||||
| Fair Price | $384 | +8.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.1x | 18.1x | 20.1x | 22.1x | 24.1x |
|---|---|---|---|---|---|
| 6.6% | $343 | $383 | $422 | $462 | $502 |
| 7.6% | $327 | $365 | $403 | $441 | $478 |
| 8.6% | $312 | $348 | $384 | $421 | $457 |
| 9.6% | $298 | $332 | $367 | $401 | $436 |
| 10.6% | $284 | $317 | $350 | $383 | $416 |
Current price: $355.88. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.