General Dynamics Sells Subsidiary - Zacks Tale of the Tape

General Dynamics (GD) sold its Satellite Development and Manufacturing Business to Orbital Sciences Corporation (ORB). General Dynamics’ subsidiary Advanced Information Systems used to oversee the business. The purchase consideration was $55 million.

Orbital augmented its workforce by about 325 new employees apart from a 135,000-square-foot space systems manufacturing, integration and test facility. Orbital develops and manufactures small- and medium-class rockets and space systems for commercial, military and civil government customers.

Orbital’s primary products are satellites and launch vehicles, including low-Earth orbit, geosynchronous-Earth orbit and planetary exploration spacecraft for communications, remote sensing, scientific and national security missions; human-rated space systems for Earth-orbit, lunar and deep-space missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles.

Orbital also provides satellite subsystems and space-related technical services to U.S. Government agencies and laboratories.

The acquisition is expected to enhance Orbital’s already-established position in the growing market for national security space systems, including spacecraft used in intelligence and surveillance, missile tracking, space situational awareness, space weather monitoring and other operational defense missions.

The combination will also substantially strengthen the company’s capabilities to design and manufacture Earth science, weather and climate monitoring, and space-based astronomy satellite systems.

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.

General Dynamics is a well-run company that is likely to continue delivering as per expectations driven by strong revenue growth, margin expansion and cash flow generation. Strong defense outlays should further improve the outlook for shareholders while an increasing funded backlog and an improving balance sheet are the other positive factors.

General Dynamics is slated to release its 2010 first quarter numbers on Apr 28, 2010. As of now the Zacks Consensus Quarterly EPS Estimate stands at $1.54. We maintain our short-term Buy recommendation on the Zacks #2 stock.

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