General Dynamics Gets MK46 Orders

Zacks

General Dynamics Land Systems, a unit of General Dynamics Corp (GD), has received a contract worth $25.7 million from the U.S. Navy for the production of eight MK46 30mm Naval Weapon Systems that will be employed on San Antonio-class (LPD-17) ships and the Littoral Combat Ship (“LCS”) class.

MK46 systems are the primary deck gun for LPD-17 ships and act as the secondary gun battery for Littoral Combat Ships. Since 2005, the company has delivered 30 MK46 systems to the Navy.

The MK46 30mm Naval Weapon System is a fully stabilized weapon system that can be used 24x7 in all weather conditions. The system’s open architecture software supports individual as well as integrated variants for multiple uses and maximum flexibility. It is one of the most cost-effective medium-caliber weapon systems. Due to its lightweight and compact size, the system is best suited for numerous anti-surface and anti-air defense applications.

Task for the contract will be performed by the existing workforce at General Dynamics Land Systems’ facilities in Woodbridge, VA; Tallahassee, FL; Lima, OH; Westminster, MD; Sterling Heights, MI; and Scranton, PA. The company expects to begin deliveries in Sep 2014.

In January this year, General Dynamics Land Systems received a contract for 24 Light Armored Vehicles from the Colombian Ministry of National Defense. General Dynamics Land Systems is a subsidiary of Combat Systems.

Backlog at Combat Systems at the end of the fourth quarter of 2012 was $8.7 billion, down from $11.4 billion in the year-ago period. However, we believe the continuous flow of contracts would likely improve the situation in the first quarter of 2013.

The company is expected to release its first quarter 2013 earnings on Apr 24, 2013. The Zacks Consensus Estimates for the first quarter of 2013 is currently at $1.59 per share.

Based in Falls Church, VA, General Dynamics Corporation is engaged in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. General Dynamics’ revenue exposure is spread over a broad portfolio of products and services that will keep the overall growth momentum steady.

However, uncertainty related to the defense budget and U.S debt situation remain an overhang for the company. The company presently retains a short-term Zacks Rank #3 (Hold).

Other stocks worth considering are The Boeing Company (BA), Lockheed Martin Corporation (LMT) and Textron Inc. (TXT), all with a Zacks Rank #2 (Buy).

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Read the Full Research Report on TXT

Read the Full Research Report on BA

Read the Full Research Report on LMT

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