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General Dynamics to Provide Support Services to Abrams System
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General Dynamics Corporation’s (GD - Free Report) Land Systems business unit recently secured a $46.2-million modification contract to provide technical support services for the Abrams tank system. The contract has been awarded by the U.S. Army Contracting Command, Warren, MI.
Work related to the deal will be performed in Sterling Heights, MI, and is scheduled to get completed by Mar 31, 2020.
A Brief Note on Abrams Tank System
General Dynamics' Abrams M1A2 is the advanced version of the M1A1 battle tank, which includes a commander's independent thermal viewer, weapon station, position navigation equipment, and a full set of controls and displays connected by a digital data bus. The M1A2 is equipped with an improved fire control system due to these upgrades. The Abrams Tank System continues to be a top tank choice for the U.S. Army, National Guard and Marine Corps as well as several U.S. allies.
Our View
In the backdrop of rising geopolitical tensions worldwide, as global nations are increasing their defense spending, demand for General Dynamics’ Abrams battle tanks continues to soar. Evidently, the company received $1.4 billion of orders for Abrams main battle tank (MBT) modernization and upgrade programs for the U.S. Army and U.S. partners, last year.
Apart from the solid demand enjoyed by this tank in the domestic front, it has a robust customer base overseas. Major international militaries of nations like Egypt, Kuwait, Saudi Arabia, Australia and Iraq are the primary customers of the Abrams battle tanks. In November 2018, the Moroccan government revealed its plans of purchasing 162 Abrams MBT’S worth $1.25 billion. Such developments will certainly enable General Dynamics to expand its share in the global market for military tanks.
Moreover, the fiscal 2019 U.S. defense budget included an allotment of $2.7 billion for Abrams battle tank modifications. Such budgetary provisions should usher in more contract wins for the Abrams system and its associated technical upgrades from Pentagon. Such contract wins are likely to boost the company’s profit margin, going ahead.
Price Performance
Shares of General Dynamics have plunged about 24% in a year compared with the industry’s decline of 4.8%.
Zacks Rank & Key Picks
General Dynamics currently carries Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are The Boeing Company (BA - Free Report) , Spirit Aerosystems Holdings (SPR - Free Report) and Heico Corporation (HEI - Free Report) .
Boeing came up with average positive earnings surprise of 17.08% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 11% to $20.08 in the past 90 days.
Spirit Aerosystems’ long-term growth estimates currently stand at 7.80%. The Zacks Consensus Estimate for 2019 earnings has risen 3.7% to $7.56 in the past 90 days.
Heico Corporation came up with average positive earnings surprise of 4.8% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 2.9% to $2.14 in the past 90 days.
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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General Dynamics to Provide Support Services to Abrams System
General Dynamics Corporation’s (GD - Free Report) Land Systems business unit recently secured a $46.2-million modification contract to provide technical support services for the Abrams tank system. The contract has been awarded by the U.S. Army Contracting Command, Warren, MI.
Work related to the deal will be performed in Sterling Heights, MI, and is scheduled to get completed by Mar 31, 2020.
A Brief Note on Abrams Tank System
General Dynamics' Abrams M1A2 is the advanced version of the M1A1 battle tank, which includes a commander's independent thermal viewer, weapon station, position navigation equipment, and a full set of controls and displays connected by a digital data bus. The M1A2 is equipped with an improved fire control system due to these upgrades. The Abrams Tank System continues to be a top tank choice for the U.S. Army, National Guard and Marine Corps as well as several U.S. allies.
Our View
In the backdrop of rising geopolitical tensions worldwide, as global nations are increasing their defense spending, demand for General Dynamics’ Abrams battle tanks continues to soar. Evidently, the company received $1.4 billion of orders for Abrams main battle tank (MBT) modernization and upgrade programs for the U.S. Army and U.S. partners, last year.
Apart from the solid demand enjoyed by this tank in the domestic front, it has a robust customer base overseas. Major international militaries of nations like Egypt, Kuwait, Saudi Arabia, Australia and Iraq are the primary customers of the Abrams battle tanks. In November 2018, the Moroccan government revealed its plans of purchasing 162 Abrams MBT’S worth $1.25 billion. Such developments will certainly enable General Dynamics to expand its share in the global market for military tanks.
Moreover, the fiscal 2019 U.S. defense budget included an allotment of $2.7 billion for Abrams battle tank modifications. Such budgetary provisions should usher in more contract wins for the Abrams system and its associated technical upgrades from Pentagon. Such contract wins are likely to boost the company’s profit margin, going ahead.
Price Performance
Shares of General Dynamics have plunged about 24% in a year compared with the industry’s decline of 4.8%.
Zacks Rank & Key Picks
General Dynamics currently carries Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are The Boeing Company (BA - Free Report) , Spirit Aerosystems Holdings (SPR - Free Report) and Heico Corporation (HEI - Free Report) .
While Boeing and Spirit Aerosystems sport a Zacks Rank #1 (Strong Buy), Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Boeing came up with average positive earnings surprise of 17.08% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 11% to $20.08 in the past 90 days.
Spirit Aerosystems’ long-term growth estimates currently stand at 7.80%. The Zacks Consensus Estimate for 2019 earnings has risen 3.7% to $7.56 in the past 90 days.
Heico Corporation came up with average positive earnings surprise of 4.8% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 2.9% to $2.14 in the past 90 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>