U.S.defense giant, General Dynamics Corporation (GD) received three contracts worth a combined value of $92.3 Million to support the Stryker vehicle program. General Dynamics Land Systems, a wholly owned subsidiary of General Dynamics, will oversee work as per the contract.
Of the three, the first contract worth $72.8 million, is for providing battle damage assessment, materials and repair services to support Stryker brigades in Iraq and Afghanistan. The second contract, worth $9.6 million, is to provide 350 Stryker vehicles with electronic video display kits. The third contract awarded valued at $9.9 million is for procurement and installation of Stryker shields. The company expects to finish work on the first and the third contract by December 2011, while the second is expected to be finished by July 2011.
The contracts seem to brighten up the fortunes of General Dynamics Combat Systems business, which witnessed a 13.6% fall in revenues year over year in the first nine months of 2010. The fall came from lower volumes for the Abrams main battle tank and Stryker wheeled combat vehicle programs.
General Dynamics manufactures Stryker vehicles under a contract first awarded in 2001. The Stryker vehicle manufactured by the company comes with 10 variants: infantry carrier; command and control; medical evacuation; fire support; engineering; anti-tank; mortar carrier; reconnaissance; mobile gun system; and nuclear, biological and chemical reconnaissance vehicle.
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 Corporation (LMT) 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.
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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