Company Description: Dover is a diversified, global manufacturer of industrial products. It comprises more than 30 independent companies that operate in four segments: Refrigeration & Food Equipment, Fluids, Energy, and Engineered Systems. General Dynamics (GD) Ronald Epstein +1 646 855 5695 Research Analyst, MLPF&S Buy, PO $200 1Q investment thesis General Dynamics is a defensive large cap value stock with potential cyclical growth. The company has a history of annual dividend increases with a dividend yield of 1.7%. Concerns about weakening demand for Gulfstream business jets in General Dynamic’s Aerospace segment have weighed down sentiment. However, using a sum-of-the-parts analysis that values GD’s defense businesses in line with the pure play defense average, this would imply that GD’s Aerospace segment is trading at a significant discount to the market at 12x P/E multiple on 2018E earnings. Considering the strength in Gulfstream’s product portfolio and margin performance, we would expect Aerospace to trade at least at 18x P/E multiple on 2018E earnings. Table 1: General Dynamics key stock data Industry Aerospace & Defense Market Cap (mn) $57,215 Price $173.21 P/E (2017)* 17.9x % of sell-side rated Buy 76.2% Short interest % of float 1.02% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Gov't Legislation: 56% of sales are from the US government General Dynamics’ primary customer is the US Department of Defense, which accounted for 47% of total sales in 2015. The remaining 9% are to other non-DoD US government agencies like the intelligence community. For the military, which is a defensive sector, GD is engaged in engineering, manufacturing, and support of land and expeditionary combat vehicles and systems, armaments, munitions, and shipbuilding and marine systems. Major products include Virginia-class nuclear-powered submarine and Ohio class ballistic nuclear submarine replacement, Arleigh Burke-class Aegis destroyer, Abrams M1A2 tank, Str