General Dynamics (GD) Unit Wins $82M U.S. Army Contract
General Dynamics Corporation’s GD business unit, General Dynamics Land Systems has won a contract from the U.S. Army to convert the Abrams M1A2 tanks into the M1A2S configuration.
Contract Details
The contract is worth $82.4 million. It was awarded by the Army Contracting Command, Warren, MI.
Work is scheduled to be complete by Mar 29, 2019. The majority of the work will be performed in Lima, OH, while the rest will be performed in Sterling Heights, MI. The contract will use fiscal 2016 (other) funds.
About the Abrams
The M1A2 is the advanced version of the M1A1, which includes a commander's independent thermal viewer, weapon station, position navigation equipment, and a full set of controls and displays connected by a digital data bus. Due to these upgrades, the M1A2 is equipped with an improved fire control system.
M1A2 System Enhancement Package (“SEP”) V2 is the most advanced digital tank with improved color displays, day and night thermal sights, commander remote-operated weapon station (“CROWS II”), a Thermal Management System (“TMS”), and a tank infantry phone.
Conversion into the M1A2S configuration will boost efficiency and capability of the tank. Moreover, M1A2S vehicles possess distinct capabilities that ramp up the weapon’s ability to kill, while limiting obsolescence.
Why General Dynamics?
General Dynamics has had a long-standing strategic alliance with the U.S. defense establishments, backed by its consistent efforts on trying to meet its commitments in terms of maintaining product and service standards, along with delivery timing. The company has been upgrading Saudi Arabia’s fleet of M1A1 and M1A2 tanks for a long time.
General Dynamics’ Abrams tanks provide troops with a proven and supreme decisive edge. In addition, survivability, mobility, adaptability and maintainability are important features of the tank. These capabilities make the tanks formidable and allow them to dominate the battlefield. Major international militaries of countries like Egypt, Kuwait, Saudi Arabia, Australia and Iraq are the primary customers of the Abrams tanks.
Price Movement
General Dynamics’s stock has improved about 26.3% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry’s gain of 11.8%. This could be because General Dynamics consistently maintains a strategic alliance with the U.S. Department of Defense, which allows it to enjoy a steady flow of contracts.
Zacks Rank & Key Picks
General Dynamics currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the aerospace and defense space are Engility Holdings, Inc. EGL, Northrop Grumman Corporation NOC and Leidos Holdings, Inc. LDOS.
On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 earnings estimates increased 13.4% over the last 60 days. Engility sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company’s 2016 earnings estimates increased 6% in the last 60 days.
Leidos Holdings carries a Zacks Rank #2 (Buy). The company’s 2016 earnings estimates increased 10.3% over the last 60 days. On an average, the company has delivered a positive earnings surprise of 12.20% in the trailing four quarters.
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