General Dynamics Information Technology, a business unit of General Dynamics Corporation (GD), was awarded an Operations, Planning, Training and Resource Support Services (OPTARSS) II contract by the U.S. Army Forces Command (FORSCOM).
If all options are exercised, the five-year, indefinite delivery, indefinite quantity, multiple-award contract will be worth $2.5 billion.
OPTARSS II is a master, indefinite delivery indefinite quantity multiple award task order contract, and is structured to provide maximum flexibility for an expedited ordering process to satisfy the needs of customers throughout the Army and Department of Defense (DoD).
Under the OPTARSS II contract, General Dynamics will be responsible for planning, training, operations, mobilization and deployment, airfield operations, transformation, modeling and simulation, flight operations and force protection.
In order to provide a sustained flow of relevant and ready land power to Combatant Commanders worldwide, FORSCOM trains, mobilizes, deploys, sustains, transforms and reconstitutes conventional forces. As a part of the OPTARSS I contract, General Dynamics has continuously assisted the U.S. Army through its task orders, which includes supporting the Army for the transformation of a division-centric force that is designed to fight one or two wars to a modular, brigade-centric structure that will be able to deploy continuously worldwide.
Looking forward, key drivers for General Dynamics include reviving fortunes for the business jet market (Gulfstream), its stable business of U.S. military vehicles (Stryker combat vehicles and Abrams tanks), an ongoing share repurchase program and strong cash flow generation.
However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts is looming high. Also, we have turned slightly cautious about the company’s steadily-dropping order backlog, the recent G650 crash and 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.
The company is expected to release its first quarter 2011 results on April 27, 2011. Going forward, the Zacks Consensus Estimates for first quarter 2011 and fiscal year 2011 are currently at 1.61 per share and $7.13 per share, respectively.
Headquartered 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. Some of its competitors are The Boeing Company (BA) and Textron Inc.(TXT).
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis Report
TEXTRON INC (TXT): Free Stock Analysis Report
Zacks Investment Research
