This article is based on an official press release from General Dynamics and market data analysis.

General Dynamics Reports Record Backlog and Revenue Beat for 2025, Despite Aerospace Headwinds

General Dynamics (GD) has reported a robust performance for the fourth quarter and full year of 2025, surpassing analyst expectations for both revenue and earnings per share. In an official press release issued on January 28, 2026, the aerospace and defense prime contractor announced record-breaking backlog levels, signaling strong future demand across its portfolio.

Despite the positive headline numbers, the company’s stock experienced volatility in early trading, dropping approximately 4-5%. Market-analysis suggests this reaction reflects investor caution regarding margin pressures in the Aerospace segment and profit-taking following a significant rally over the previous year. While the company delivered solid growth, specific supply-chain challenges and tariffs impacted the delivery of Gulfstream aircraft in the final quarter.

Financial Highlights: Q4 and Full Year 2025

According to the company’s financial report, General Dynamics achieved revenue of $14.4 billion in the fourth quarter, a 7.8% increase year-over-year. This figure beat analyst estimates, which had hovered around $13.8 billion. Net earnings for the quarter remained relatively flat at $1.1 billion, while diluted earnings per share (EPS) rose slightly by 0.5% to $4.17.

For the full year of 2025, the company reported:

• Revenue: $52.6 billion (up 10.1% year-over-year).
• Net Earnings: $4.2 billion (up 11.3%).
• Diluted EPS: $15.45 (up 13.4%).
• Operating Cash Flow: $5.1 billion, an increase of $1 billion compared to 2024.

A standout metric from the release was the company’s total backlog, which swelled to a record $118 billion, representing a 30.3% increase year-over-year. When including unfunded options, the total estimated contract value stands at $179 billion.

“We had a solid fourth quarter, capping off a year that saw growth in revenue and earnings in all four segments coupled with an impressive 30% growth in company-wide backlog.”

, Phebe N. Novakovic, Chairman and CEO of General Dynamics

Segment Performance Breakdown

Marine Systems Leads Growth

The Marine Systems segment emerged as the star performer for the quarter. Revenue surged 21.7% to $4.82 billion, with operating earnings jumping 72.5% to $345 million. The company attributes this growth to improved productivity across its shipyards and sustained demand for the Columbia-class and Virginia-class submarine programs.

Aerospace Faces Supply Chain Friction

While the Aerospace segment, home to the Gulfstream brand, saw a slight revenue increase of 1.2% to $3.79 billion, operating earnings fell by 17.8% to $481 million. Company leadership cited specific headwinds, including supply chain delays and new tariffs, which resulted in the delivery of three fewer G600 aircraft than anticipated.

During the earnings call, Danny Deep, President and COO, provided context on the margin compression:

“The margin issue was the G600 product line… attributable to the delivery of three fewer aircraft… and the imposition of tariffs in this quarter.”

, Danny Deep, President and COO

Combat Systems and Technologies

The Combat Systems unit reported steady growth, with revenue up 5.8% to $2.54 billion. This segment continues to benefit from high international demand for munitions and combat vehicles, driven by the ongoing geopolitical security environment in Europe. Meanwhile, the Technologies segment remained flat in revenue at $3.24 billion, with earnings declining 9.1% due to difficult year-over-year comparisons involving one-time items in 2024.

2026 Outlook and Guidance

Looking ahead, General Dynamics management provided a positive forecast for 2026. The company expects revenue to range between $54.3 billion and $54.8 billion, with EPS projected between $16.10 and $16.20. Operating margins are expected to expand to approximately 10.4%.

To support this growth, the company plans to increase capital expenditures to over $900 million in 2026. CEO Phebe N. Novakovic emphasized the necessity of this investment:

“As we focus on execution of programs for our customers, we are also preparing aggressively for future growth, investing nearly $1.2 billion in capital expenditures in 2025, with even more investments planned in the year ahead.”

, Phebe N. Novakovic, Chairman and CEO

AirPro News Analysis

While the headline numbers represent a “beat,” the market’s negative reaction highlights a sensitivity to execution risks in the high-margin Aerospace sector. The drop in Aerospace margins, down to roughly 12.7% in Q4, appears to be the primary concern for investors who had priced in flawless execution following the stock’s 40% rally over the last 12 months.

However, the record backlog suggests that the fundamental demand story remains intact. The “book-to-bill” ratio of 1.6x for the quarter indicates that orders are coming in significantly faster than products are going out, a leading indicator of long-term revenue stability. The sell-off may be viewed by analysts as a short-term valuation reset rather than a structural failure, particularly as the G700 and G800 jet cycles mature.

Sources

• General Dynamics Press Release