U.S. Markets closed

GD Receives Twin Navy Contracts

Zacks Equity Research

General Dynamics Corp. (GD) clinched two Department of Defense (DoD) contracts totaling $63.9 million. The first contract worth $48.8 million calls for the upgrade of the U.S. Marine Corps Range Training Systems (RTSs).

General Dynamics will offer production, test, installation and delivery of the RTSs in support of the Navy’s Program Manager Training Systems ("PM TRASYS"). The contacting activity is the Marine Corps Systems Command, Quantico, Va. The contract will run through Sep 2016 and the work will be executed in Fairfax, Va.

The PM TRASYS initiative enhances the fighting capabilities of the Marine Air-Ground Task Force and maritime expeditionary forces positioned globally via training support and development of training systems as well as devices.

The smaller contract worth $15.1 million went to General Dynamics’ SATCOM Technologies Inc. for the production and supply of up to 80 Ku-Band terminals, Ka-Band conversion kits and X-Band conversion kits for the Naval Air Warfare Center Aircraft Division, Special Communications Requirements Division. The delivery is expected to be concluded in Sep 2016.

Active counter terrorism programs worldwide are expected to remain a crucial element of the country’s defense program in the coming years. This will require constant system upgrades in U.S. Navy and Army training programs, opening up opportunities for General Dynamics.

The company has strategically withstood the difficult budget climate in the U.S. by focusing on the development of its diversified defense products. The steady inflow of international orders has been a booster and will continue to contribute to General Dynamics’ future growth.

The countries of Egypt, Saudi Arabia, Iraq and Kuwait in the Middle East are expected to be its primary customers. Recently, General Dynamics received a $187.5 million contract for the conversion of 44 M1A1 and 40 M1A2 model tanks to a M1A2S configuration for the Kingdom of Saudi Arabia.

With domestic contracts also coming in at regular intervals, General Dynamics is poised to remain well positioned in the industry. Nonetheless, the company is subject to more sequestration cuts in fiscal 2014.  

General Dynamics presently carries a Zacks Rank #3 (Hold). Other better-placed operators include Zacks Ranked #2 (Buy) Northrop Grumman Corp. (NOC), Raytheon Company (RTN) and B/E Aerospace Inc. (BEAV).

Read the Full Research Report on GDRead the Full Research Report on NOCRead the Full Research Report on RTNRead the Full Research Report on BEAVZacks Investment Research