General Dynamics Gets Army Contract

Aerospace and defense operator General Dynamics Corporation (GD - Analyst Report) received a follow-up contract worth $53.9 million from the U.S. Army to produce 13,000 Joint Tactical Radio System (JTRS) Handheld, Manpack, Small Form Fit (HMS) AN/PRC-154 Rifleman radios and accessory kits.

These advance radio systems will have mobile voice, video and data communications capabilities, providing soldieries in combat missions with a vital edge over enemies. The dual channel radio system will not only allow the transmission of vital information from the battle ground to the commanders but also allow the commanders to communicate the development to higher authorities.

We believe accuracy and promptness in communication and subsequent tactical decision and moves provide additional advantage in the battle field. The importance of the radio system has prompted the Army to place a follow-up order after an initial order of 6,000 units. The Army expects to distribute these systems to Infantry Brigade Combat Teams from October 2012.

General Dynamics C4 Systems is part of General Dynamics’ Information Systems and Technology group. C4 Systems will be entrusted with the responsibility of supplying the necessary radios. The Information Systems and Technology system has registered an 11.6% slide in total revenue in the first six months of 2012. We believe a gradual recovery in orders in the latter half of the year will help the segment to recover lost ground.

During the second quarter earnings call General Dynamics showed caution while providing the 2012 earnings per share guidance. Taking into account the possibility of award delay in the Information Systems and Technology’s tactical communications business, the company has lowered its earnings guidance range for 2012 to $7.00–$7.10 per share from $7.10–$7.20 per share earlier. The Zacks Consensuses Estimate for 2012 of $7.10 per share is on the higher end of the guided range.

General Dynamics currently retains a Zacks #3 Rank (short-term Hold rating). Some of its main competitors are Lockheed Martin Corporation (LMT - Analyst Report) and Textron Inc. (TXT - Analyst Report).

Based in Falls Church, Virginia, General Dynamics, with its units, operates in business aviation, land and expeditionary combat systems, armaments and munitions, shipbuilding and marine systems, and information systems and technologies.