General Dynamics (NYSE:GD) emerged from the fog like an armored column this morning.

One year after a massive write-down at its information systems division caused General Dynamics to "miss earnings," the nation's largest maker of heavy armored vehicles for the military confirmed Wednesday that it's finally profitable again -- and in a big way. Fourth-quarter earnings from continuing operations, reported this morning, amounted to $1.76 per share on revenues of $8.1 billion -- ahead of estimates on both counts. Net profits for the quarter were $1.40 per share.

The company now has a full year of results not tainted by write-downs to examine; therefore, let's also take a look at them. For full-year 2013, General Dynamics:

  • earned $6.67 per diluted share, versus last year's loss
  • recorded $31.2 billion in revenues, down a fraction of a percent from last year
  • generated positive free cash flow from its business of $2.7 billion -- 13% more than it reported as "net profit," and a 19% improvement over last year's FCF number

Profit margin performance at the company is a bit difficult to characterize, set up as it is against a year in which the information systems' write-down so completely derailed the company's results. That being said, information systems did turn profitable again this year (7.7% operating margin), helping the company as a whole to achieve a respectable 11.8% operating profit margin. For context, Textron (NYSE:TXT), another armored-vehicle maker with which the General competes, and which also reported earnings today, achieved an overall operating profit margin of 5.6% -- less than half as good as General Dynamic's number.

Two of General Dynamics three other major divisions, aerospace and combat systems, saw profit margin improvement -- by 500 basis points and 650 basis points, respectively, to 17.4% and 14.8%. Of General Dynamics' four main divisions, only the marine one saw a decline in profitability, falling 150 basis points from 11.4% operating profit margin to 9.9%.

What it means to you
Does all of this add up to a "buy thesis" for General Dynamics? Sadly, no. Valued on its earnings -- earnings no longer weighed down, or excused, by a single-quarter's write-down -- General Dynamics sells for 14.1 times earnings today. Based on the company's projected long-term-earnings-growth rate under 7%, that's too expensive.

Valued on free cash flow, the picture's a bit brighter, with a price to free cash flow ratio of just 12.3. But earnings growth in the middle- to upper-single digitsĀ isn't good enough to justify that price, either. Long story short, while General Dynamics is looking a whole lot healthier today than it was a year ago, the 33% rise in stock price it's enjoyed over the past 12 months has already "baked in" the improvements. Absent faster growth, or a lower stock price, this one's no buy.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics and Textron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.