General Dynamics Gets LAV Contract

Zacks

General Dynamics Land Systems, Canada, a business unit of General Dynamics Corporation (GD), has received a contract for the production of 13 Light Armored Vehicles (LAV-A2) from U.S. Marine Corps. The contract value is $24 million.

Since 2007, the Marine Corps has ordered 253 LAV-A2 vehicles. The company expects the first delivery in Jun 2014 and the last delivery in Oct 2014.

General Dynamics Land Systems is the leader in Light Armoured Vehicle platforms. It offers the forces with the most advanced technologies combined with combat-proven survivability. The LAV-A2 is a mobile, survivable and lethal system that conducts a number of functions, which include security, reconnaissance, offensive and defensive operations as a part of the Marine Air-Ground Task Force. The eight-wheeled vehicle operates on both land and water and provides military with enhanced mobility, increased firepower and superior protection.

Recently, in January 2013, General Dynamics received a contract from Colombian Army for 24 Light Armoured Vehicles. Vehicles under this contract will be the LAV III version with double-V hull technology and add-on armour that provides crew members with the latest in protection against mine blasts, IEDs and other threats.

General Dynamics is progressing well with different kinds of contracts that will boost the company’s top and bottom line. Recently, the company had also received a contract for the procurement and production of 69 Saudi M1A2S Abrams tanks for Saudi Arabia.

Going forward, key growth drivers for the company include improving business jet market, stable business of U.S. military vehicles, and strong cash flow generation. However, we prefer to remain on the sidelines as future prospects of the company are tied to the U.S. defense budget. The company presently retains a short-term Zacks Rank #4 (Sell). We have a long-term Neutral recommendation on the stock.

Based in Falls Church, Virginia, General Dynamics Corporation engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation.

Some of its main competitors are Lockheed Martin Corporation (LMT) and Huntington Ingalls Industries, Inc. (HII).

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