General Dynamics Bags Two Contracts

Oct. 7.09 | About: General Dynamics (GD)

General Dynamics Corporation (GD) Tuesday bagged twin contracts worth approximately $750 million from the U.S. Army and Navy.

General Dynamics’ subsidiary General Dynamics Land Systems bagged a five-year contract worth $430 million for work at the Army tank research center. The company will provide engineering, electronics and manufacturing services. Separately, General Dynamics bagged a $320.6 million contract from the U.S. Navy. The company will design, plan and provide engineering and technical support for active nuclear submarines till October 2010.

Earlier, General Dynamics maintained its brisk pace in order booking, taking the total backlog at the end of the second quarter of fiscal 2009 to $67.6 billion. This was a 22.2% rise compared to the $55.3 billion figure in the year-ago quarter.

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. The company operates through four segments: Information Systems & Technology (IS&T), Combat Systems, Marine Systems, and Aerospace.

We view General Dynamics as a well-run company that is likely to continue to deliver on expectations driven by strong revenue growth, margin expansion and cash flow generation. Strong defense outlays should further improve the company’s outlook for shareholders while an increasing funded backlog and an improving balance sheet signal additional positive factors for the company. We maintain our Neutral recommendation on the shares.