Zacks_Analysts' Blog : GD Canadian Unit in Field Support - Analyst Blog

General Dynamics Land Systems-Canada, a business unit of General Dynamics Corporation (GD), received a contract worth $49.2 million from the U.S. Army TACOM Life Cycle Management Command.

Per the contract, General Dynamics will provide training and field service support for Light Armored Vehicles (“LAV”) that was previously supplied under a Foreign Military Sale (“FMS”) contract. Support activities under this contract include the provision of field support teams to conduct operator and maintenance training, technical support and fleet status monitoring.

The five-year contract was awarded through the Canadian Commercial Corporation, a Crown Agency of the Canadian Government and is expected to be completed by July 2016.

Recently, General Dynamics also teamed up with other major defense contractors such as Lockheed Martin Corporation (LMT), Raytheon Company (RTN), and Tognum America Inc. to bag a contract worth $439.7 million for the technology development of the U.S. Army's Ground Combat Vehicle (“GCV”) Infantry Fighting Vehicle (“IFV”) program.

General Dynamics’ revenue exposure is spread over a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; shipbuilding design, repair and construction; and information systems, technologies and services. It continues to benefit from strong congressional support for its programs in the 2011–12 defense budgets.

However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts is looming high. Also, we are slightly cautious about the company’s steadily dropping order backlog, as well as the recent G650 crash and risks related to the execution of key projects. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Headquartered in Falls Church, Virginia, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company operates through four segments: Information Systems & Technology (IS&T), Combat Systems, Marine Systems, and Aerospace.