General Dynamics has managed to avoid much of the defense stock pain that came after fighting began in Iran. Another strong quarter has shares up in early trading on Wednesday.
For the second quarter, the maker of the Abrams tank announced earnings per share of $4.24 from sales of $14.1 billion. Wall Street was looking for earnings per share of $3.96 from sales of $13.5 billion. A year ago, it reported $3.74 and $13 billion, respectively.
Operating profit margin was 10.4%, up 0.4 percentage point year-over-year.
Orders were higher than sales, a good omen for future revenue growth.
General Dynamics' business jet division grew sales 15%. The marine division grew sales 10%. The sensors and technology division grew 4% and combat systems, which includes tanks and munitions, eked out a small gain.
Shares were up 1% at $397 in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were up 0.2% and down 0.3%, respectively.
"Our businesses delivered solid results in the quarter, with revenue growth across all four segments," said CEO Phebe Novakovic in a news release. "We are well positioned to support our customers' needs and are continuing to make significant investments to increase output to meet strong and growing demand."
General Dynamics has been able to avoid the worst of the post-Iran defense stock selloff. Coming into Wednesday trading, shares of Lockheed Martin and Northrop Grumman were down 12% and 24%, respectively since the start of fighting in Iran. General Dynamics stock was up 10%.
Fighting, in theory, should help defense stocks, leading to higher defense spending, but annual defense outlays are already north of $1 trillion in the U.S., and the Iran war has raised the odds of a Democratically-controlled House of Representatives. Investors fear that could pressure spending growth.
As for General Dynamics, commercial aerospace, i.e. Gulfstream business jets, has likely helped overcome fears. Overall, heading into the day, General Dynamics stock was up 17% this year and up 26% over the past 12 months.