General Dynamics Gets Contract (BUY)

General Dynamics Land Systems – Canada, a business unit of General Dynamics Corporation (GD: 59.87 0.00 0.00%), has got a $34.4 million Canadian contract. Under this contract, General Dynamics will perform trade-off studies, design work, prototype build and testing to define the upgrades that will be incorporated into Canada’s fleet of Light Armoured Vehicle (LAV) III. The resultant upgrade package will enhance LAV III’s performance in survivability, mobility and firepower.

 

Work under contract will be carried out at General Dynamics Land Systems-Canada facility in London, Ontario, and Edmonton, Alberta, as well as the company’s nationwide network of over 400 Canadian suppliers.

 

General Dynamics Land Systems – Canada, located in London, Ontario, Canada, is a business unit of General Dynamics Land Systems of Sterling Heights, Michigan. The unit is part of the company’s Combat Systems business segment. The unit 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 year over year. This was due to lower 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 the 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, backed by 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: 54.55 0.00 0.00%), Lockheed Martin Corporation (LMT: 74.74 0.00 0.00%), Raytheon Company (RTN: 48.10 0.00 0.00%) and Force Protection Inc. (FRPT: 4.15 0.00 0.00%).

 

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 to be $80.9 billion. Per the Zacks Consensus Estimate, earnings per share for fiscal 2010 are expected to be $6.58.

 

General Dynamics is a well-run company that is likely to continue to meet expectations on 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.

Analysts' Targets
Barclays Capital	$72
Equal-weight
Wednesday, July 07, 2010
UBS Securities	$80
Add
Thursday, July 01, 2010
RBC Capital Markets	$73
Neutral
Tuesday, June 29, 2010
HSBC Securities	$75
Overweight
Thursday, June 17, 2010
Deutsche Bank Securities	$84
Neutral
Tuesday, June 08, 2010

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