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June 4, 2010
Share ThisGeneral Dynamics’ (GD) business unit – General Dynamics Land Systems has been awarded a $92 million contract to supply high-performance Stabilized Commander's Weapon Stations (SCWS) to the U.S. Army TACOM Lifecycle Management Command of Warren, Michigan.
The weapon station provides Army and United States Marine Corps vehicle commanders with the ability to acquire and engage targets from inside the protection of an armored vehicle. The work on the contract is expected to be completed by February of 2013.
General Dynamics Land Systems is part of the company’s Combat Systems business segment. General Dynamics Land Systems plays an integral role in the U.S. Army's core vehicle programs, including the Abrams tank (M1A2 SEP upgrade and AIM), Stryker infantry combat vehicle and Fox NBC reconnaissance vehicle, and in its modernization plan.
General Dynamics’ Combat Systems business segment witnessed a 16.8% decline in revenues in the first quarter of 2010 compared with the previous year. This was due to fewer sales of axles and suspensions, a reduction in small caliber ammunition sales to the U.S. Army and the completion of deliveries of systems that protect U.S. combat forces from improvised explosive devices (IEDs).
General Dynamics’ Combat Systems business performance is expected to improve in the second half of 2010 due to recently awarded contracts for axles and suspensions on new and retrofit MRAP vehicles as well as opportunities for armor kits for Bradley and Stryker vehicles.
General Dynamics, headquartered in Falls Church, Virginia is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. The company operates through four business segments − Information Systems & Technology, Combat Systems, Marine Systems, and Aerospace. The major competitors of the company are Northrop Grumman Corporation (NOC), Lockheed Martin Corporation (LMT), Raytheon Company (RTN) and Force Protection Inc. (FRPT).
General Dynamics’ funded backlog at the end of the first quarter of 2010 grew to $47.4 billion, a 3% increase over the end of fiscal 2009. Overall General Dynamics’ total backlog stood at $63.9 billion at the end of the first quarter of fiscal 2010. The company estimates the total contract value of its current backlog at $80.9 billion. Per the Zacks Consensus Estimate, earnings per share for fiscal 2010 are expected to be $6.57.
General Dynamics is a well-run company that is likely to continue to deliver on expectations, driven by strong revenue growth, margin expansion and cash flow generation. Strong defense outlays should further improve the company’s outlook for shareholders while an increasing funded backlog and an improving balance sheet are the additional positive factors.
We currently have a market Neutral recommendation on the Zacks Rank #3 stock, General Dynamics.
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