General Dynamics Advanced Information Systems, a business unit of General Dynamics Corporation (GD) was awarded a contract by Austal USA to act as the Platform Systems Engineering Agent (PSEA) of the Independence-class Littoral Combat Ships (LCS). Austal is an Australian company that specializes in the design and construction of aluminium vessels. Its main products include passenger and freight ferries, luxury yachts and military vessels. Initially General Dynamics is expected to work on one ship, with nine additional ship contracts to be awarded over the following five years. The work on the initial contract will be performed through 2014. General Dynamics’ LCS contract is part of the U.S. Navy contract awarded to Lockheed Martin Corporation (LMT) and Austral USA for construction of new LCS class ships.
General Dynamics would be responsible for the design, integration and testing of the ship’s combat and sea-frame control systems. This contract could create more than 500 additional jobs with General Dynamics Advanced Information Systems. General Dynamics Advanced Information Systems is a provider of end-to-end intelligence and cyber solutions and mission systems integration to customers in the defense, intelligence and homeland security communities.
Based in Falls Church, Virginia, General Dynamics is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. The company was ranked as the fourth largest U.S. defense contractor in terms of revenue in fiscal 2009, after The Boeing Company (BA), Lockheed Martin and Northrop Grumman Corporation (NOC).
General Dynamics currently estimates full-year 2010 operating earnings in the range of $6.70 to $6.75 per share, taking into consideration the robust performance during the third quarter. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and 2011 are $1.85 per share, $6.76 per share and $7.09 per share, respectively. The company is slated to release its fiscal 2010 numbers on January 26, 2011.
General Dynamics currently retains a Zacks #3 Rank (short-term Hold rating). We also maintain our ‘Neutral’ recommendation on the stock.
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