General Dynamics Corp reported a better-than-expected quarterly profit on Wednesday as strength in defense sales helped offset weakness in business jets.
The maker of tanks and ships raised its profit forecast for this year, but its shares eased in morning trading.
The stock has been strong recently, and we believe the Street was anticipating a solid quarter, so near-term upside could be limited, but there is no denying that the company posted good results, J.P. Morgan analyst Joseph Nadol said in an early note to clients.
The one negative is that aerospace backlog continued to decline fairly sharply, he added.
Net earnings came to $572 million, or $1.47 a diluted share, for the third quarter, down 10 percent from $634 million, or $1.59 a share, a year earlier.
Excluding discontinued operations, earnings were $1.48 per share. On that basis, analysts on average expected $1.40, according to Thomson Reuters I/B/E/S.
Revenue rose 8 percent to $7.72 billion.
A five-week production shutdown at the Gulfstream Aerospace unit affected the aerospace division, where sales were down 18 percent in the quarter and operating profit sank 56 percent.
Revenue and operating earnings rose in the company's three defense-related business segments, aided by increased demand for armored vehicles and ammunition.
General Dynamics said it now expects full-year profit from continuing operations of $6.15 to $6.20 a share this year, compared with a July view of $6.05 to $6.15.
The company's shares were off 7 cents to $65.71 on the New York Stock Exchange.
(Reporting by Karen Jacobs; editing by John Wallace, Dave Zimmerman)