S&P Global Ratings has moved its outlook on General Dynamics Corp. (NYSE: GD) to positive from stable while reaffirming the company’s long-term issuer credit rating at 'A'. The ratings agency also maintained General Dynamics’ short-term issuer credit rating at 'A-1' and upheld 'A' issue-level ratings on the company’s unsecured debt.
The agency said the outlook change reflects expectations that General Dynamics will sustain leverage below 1.5x and keep funds from operations to debt above 60% as continued strength in defense demand supports cash flow generation. S&P’s projections show debt-to-EBITDA below 1.5x and funds from operations to debt in the 80% to 100% range over the next two years, driven by rising earnings and stronger cash flow.
On the commercial aviation front, General Dynamics’ Gulfstream unit has refreshed its private-jet product line. S&P noted that the updated Gulfstream offerings bolster the company’s standing at the high end of the business-jet market and are supporting demand for its aircraft.
Fiscal policy expectations also factor into S&P’s view. The White House’s 2027 budget proposal includes a roughly $1.5 trillion request for defense spending, which S&P characterizes as about a 44% increase over 2026 levels, with notably larger allocations for naval shipbuilding. That anticipated increase in defense funding underpins the agency’s outlook for General Dynamics’ cash flow and order environment.
To meet what it describes as accelerated demand for naval vessels, General Dynamics is expanding shipbuilding capacity. S&P identified the company’s focus on production of Virginia- and Columbia-class nuclear submarines as central to that capacity expansion, along with moves to boost output of key munitions.
Funding these investments will lift capital expenditure, the agency estimates. S&P expects General Dynamics’ capex to run about 3.5% to 4.0% of sales this year and next year, up from historical levels of about 2.0% to 2.5% of sales, reflecting investments in shipbuilding and munitions production.
On the balance-sheet front, General Dynamics has reduced its debt by $5 billion since the start of 2021. That decline includes $750 million of debt reduction in 2025, primarily attributable to internally generated cash flow, the ratings agency said.
S&P also observed a notable change in capital-allocation behavior among defense contractors. Following an executive order issued in January 2026 by the Trump administration criticizing defense companies for prioritizing share buybacks over production capacity, many defense contractors, including General Dynamics, have largely suspended share repurchases.
Market trading data included with the company’s profile showed GD at 348.92, up 6.23 or 1.82% at the close, with an after-hours quote near 348.45, down 0.51 or 0.15%.