Defense contractor General Dynamics (GD) announced that its unit General Dynamics Armament and Technical Products received an order worth $35 million from the U.S. Army to manufacture M2A1 quick change barrel (QCB) conversion kits.
 
The QCB conversion kits will have certain replacement parts, which will transform the presently used M2 heavy barrel (M2HB) machine guns to the M2A1 configuration. This new configuration will reduce the time span of changing machine gun barrels. The QCB kits, saving on precious time in between conversion, have a vital safety function for defense personnel in combat, restricting their exposure to enemy fire.
 
General Dynamics will produce the conversion kits from its facility in Saco, Maine. The company will begin to deliver the kits from January 2011 and will complete the delivery by the end of December 2012.
 
During September, General Dynamics has won quite a few contracts from the defense department, a few significant ones being the $68 million contract from the U.S. Army for Abrams Tank System Technical Support and the $30 million contract, also from the U.S. Army, for production and field support of Joint Biological Point Detection Systems.
 
The General Dynamics Armament and Technical Products wing is a part of General Dynamics’ Combat Systems operating segment. During the second quarter of 2010, Combat Systems contributed 26% of the company’s total revenue.
 
The adjusted earnings of General Dynamics at the end of second quarter 2010 were $1.68 per share compared with $1.61 per share in the year-ago comparable quarter. The Zacks Consensus Estimates for third quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are $1.64 per share, $6.66 per share and $7.05 per share, respectively.
 
General Dynamics currently retains a Zacks #3 Rank (short-term Hold rating). We also maintain a Neutral rating on the stock, given the soft demand for the mid-size cabin jets and dependence of the company on the U.S. defense budget, which faces a lurking possibility of a cutdown.
 
Falls Church, Virginia based General Dynamics, with its units, operates in business aviation, land and expeditionary combat systems, armaments and munitions, shipbuilding and marine systems and information systems and technologies.

 
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