GD Wins Army Contract – Analyst Blog

General Dynamics Corporation (GD) announced that one of its operating units General Dynamics Land Systems has won an army contact worth $10.9 million. The company will supply parts of armored vehicles to the army.

General Dynamics Land Systems will supply 256 units of Abrams reactive armor tile, 743 of Abrams reactive armor tile weldments, 300 Abrams reactive armor tile brush guards and 300 Abrams reactive armor tile brackets to the army as per the contract.

The staff of General Dynamic’s Lima, Ohio plant will manufacture the supply parts. General Dynamics expects to complete the work by December 31, 2011.

General Dynamics continues to win contract from the army, the most recent ones being the $92 million contract to build weapon stations and the $1.2 billion contract for modernization of U.S. air traffic control systems.

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 operates through four business segments − Information Systems & Technology, Combat Systems, Marine Systems, and Aerospace. The major competitors of the company are Boeing Co. (BA), Lockheed Martin Corporation (LMT) and Textron Inc. (TXT).

During the first-quarter earnings call, General Dynamics provided segment-wide guidance for 2010. Information Systems & Technology is expected to grow 8% to 9% and Marine Systems to grow 7% to 9% over 2009 levels. Combat Systems is expected to increase 4% to 5% over 2009 levels with the majority of improvement anticipated in the second half of 2010. Aerospace revenue is expected to increase in the low- to mid-single-digit percent over 2009 levels, and the company expects to deliver the same number of Gulfstream aircraft, with a further shift toward large-cabin models. The Zacks Consensus earnings estimate for the second-quarter 2010 is $1.61 per share and for 2010 is $6.58 per share.

We presently retain our Neutral outlook on General Dynamics as future prospects of the company largely depend upon the U.S. defense budget. Adding to its woes is a bleak scenario for mid-sized cabin jets and risks related to execution of key projects.