General Dynamics C4 Systems, a business unit of General Dynamics Corporation (GD), has received a $2.3 million U.S. Army’s Joint Battle Command – Platform (JBC-P) Handheld program contract.
Under the contract, General Dynamics will provide a prototype, handheld battle command capability that will help in providing increased command, control and situational awareness and unique network connectivity to soldiers and Marines. For its prototype design, General Dynamics will provide the rugged, eight-ounce GD300 tactical computer that aids an easy operating system. GD300 provides users with situational awareness of events, people and structures, along with chat and texting capabilities.
The JBC-P Handheld Battle Command is one of the several Joint Battle Command initiatives. It is responsible to deliver handheld devices that communicate over government-furnished communication networks. Additionally, it gives users enhanced levels of battlefield awareness.
With initial deliveries scheduled in September 2011, General Dynamics expects to deliver 40 prototype handheld devices for user evaluation and feedback. During the second phase of the program, up to 250 JBC-P interoperable handheld devices are expected to be purchased as part of a contract option. The Communications-Electronics Research, Development and Engineering Center at Aberdeen Proving Ground, Maryland will act as a contracting authority for the handheld device development effort. Work will be done in Fort Wayne, Indiana and Scottsdale, Arizona.
We view General Dynamics as a well-run company with revenue growth, margin expansion and cash flow generation. Looking forward, key drivers include reviving fortunes at its business jet market (Gulfstream), stable business for U.S. military vehicles, an ongoing share repurchase program and strong cash flow generation.
However, General Dynamics is largely tied to the U.S. defense budget and steadily falling order backlog along with risks related to the execution of key projects. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peer EMBRAER – Empresa Brasileira de Aeron (ERJ).
Based in Falls Church, Virginia, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation.
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