Army Deal for General Dynamics - Analyst Blog

Aerospace and defense company General Dynamics Corporation (GD) announced that its unit, General Dynamics Information Technology, received a contract worth $122 million from the U.S. Army. The company will provide information technology services to the U.S. Army Europe (USAREUR) headquarters in Heidelberg, Germany, and other sites in Germany and at Camp Bondsteel in Kosovo.

The new contract will mark 40 years of General Dynamics' involvement in USAREUR missions. As per the contract, the company will provide systems engineering, look into network integration and configuration, and provide services relating to video teleconferencing and web development. The company will also provide logistics, training, planning and exercises support at army sites.

General Dynamics' unit has consistently received contracts from the Defense establishment. In November 2010, this unit was selected as one of 46 awardees of the Information Technology Supplies and Support Services contract, which has a potential value of $30 billion to all awardees over eight years if all options are exercised.

In a separate deal, the company was selected as one of five awardees under the Missile Defense Agency Engineering and Support Services contract, which has a potential value of $1.6 billion to all awardees.

General Dynamics' close peers are not behind in the race for winning new defense contracts. Recently, Lockheed Martin Corporation (LMT) received a contract worth $249 million to upgrade the U.S. Navy's aging fleet of H-60 helicopters while The Boeing Company (BA) received a contract worth $1 billion from the Mexican Government to provide a satellite system for national security and civil telecommunications.

Adjusted earnings of General Dynamics for third-quarter 2010 were $1.25 per share versus $1.14 per share at the end of third-quarter 2009. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are $1.85 per share, $6.76 per share and $7.09 per share, respectively.

General Dynamics currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-tern Neutral rating on the stock.

Based in Falls Church, Virginia, General Dynamics, along with its units, operates in business aviation, land and expeditionary combat systems, armaments and munitions, shipbuilding and marine systems as well as information systems and technologies.

 
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