General Dynamics Corporation (GD) said it has achieved the one billion mark of ammunition production for the U.S. Army’s Second Source Small Caliber Ammunition program. General Dynamics carries out the U.S. Army’s program through its subsidiary General Dynamics Ordnance and Tactical Systems.
The Small Caliber Second Source program plays an important part in meeting the urgent needs of warfighters, and it continues to provide combat readiness of the Armed Forces.
General Dynamics was awarded the U.S. Army contract in August 2005. Extending for a period of five years, the contract established General Dynamics as a second-source prime contractor to manage a consortium of worldwide small-caliber ammunition producers. Under the contract, General Dynamics produces various types of 5.56mm, 7.62mm and 0.50 caliber ammunition.
Managed by the U.S. Army Project Manager – Maneuver Ammunition Systems, the Small Caliber Second Source program was established to address the critical demand for small-caliber ammunition during Operations Enduring Freedom and Iraqi Freedom.
Based in Falls Church, Virginia, General Dynamics is one of the leading companies in business aviation, information systems and technologies, shipbuilding and marine systems, and land and amphibious combat systems, as well as armaments and munitions. Some of its main competitors are Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
In January this year, General Dynamics announced its fourth quarter and 2010 earnings results. The company generated total revenue of $8.6 billion in the quarter versus the Zacks Consensus Estimate of $8.9 billion. In 2010, total revenue grossed $32.5 billion versus the Zacks Consensus Estimate of $32.8 billion.
General Dynamics’ revenue exposure is spread over a broad portfolio of products and services. Diversification of revenue through exposure to a number of uncorrelated markets will keep the overall growth momentum steady. However, the company’s fortunes are largely tied to the U.S. defense budget, where the threat of budget cuts is looming high.
Also, we have become slightly cautious about the company’s 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 to our long-term Neutral recommendation on the stock.
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