Is General Dynamics Corp. overvalued or undervalued?

As of 23 July 2025, the valuation grade for General Dynamics Corp. has moved from very attractive to attractive, indicating a shift in market perception. The company appears to be fairly valued based on its current metrics. The P/E ratio stands at 32, which is relatively high compared to peers like Northrop Grumman Corp. with a P/E of 21.12, and Honeywell International, Inc. at 30.10. Additionally, the EV to EBITDA ratio is 23.16, while RTX Corp. has a lower EV to EBITDA of 22.55, suggesting that General Dynamics may be priced at a premium.
In terms of returns, General Dynamics has outperformed the S&P 500 year-to-date with a return of 23.18% compared to the S&P 500's 12.22%. However, over the longer term, its 3-year return of 42.70% lags behind the S&P 500's impressive 70.41%, indicating potential challenges in maintaining growth momentum. Overall, while General Dynamics is currently fairly valued, its high valuation ratios suggest caution for potential investors.