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General Dynamics' (GD) Unit Wins $311M U.S. Army Contract

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General Dynamics Corporation’s (GD - Free Report) business unit, Land Systems, secured a contract to design, develop and integrate several engineering changes into the Abrams M1A2 SEP V3 (System Enhancement Package Version 3).

Contract Details

Valued at $310.6 million, the contract has been awarded by the Army Contracting Command, Warren, MI.

Work is scheduled to be completed by Feb 28, 2024. It will be performed in Lima, OH; Sterling Heights, MI; Scranton, PA and Tallahassee, FL. The deal will use fiscal 2017 research, development, test and evaluation funds.

About the Abrams

The 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.

Notably, M1A2 SEP V3 is the most modern version of the Abrams tank. It has a number of upgrades in the area of survivability, maintainability, fuel efficiency and network capabilities. Moreover, its upgrades comprise the new armor package and improved anti-IED capability.

Why General Dynamics?

General Dynamics has a long-standing strategic alliance with the U.S. defense establishments. This partnership has been backed by its consistent efforts on trying to meet its commitments in terms of maintaining product and service standards, along with delivery timing. Also, it has been upgrading Saudi Arabia’s fleet of M1A1 and M1A2 tanks for a long time.

General Dynamics’ Abrams tanks provide troops with a proven and supreme decisive edge. In addition, survivability, mobility, adaptability and maintainability are important features of the tank. These capabilities make the tanks formidable and allow them to dominate the battlefield.

Major international militaries of countries like Egypt, Kuwait, Saudi Arabia, Australia and Iraq are the primary customers of the Abrams tanks.

Price Movement

General Dynamics’s stock has rallied about 30.3% in the last year, underperforming the broader industry’s gain of 36.3%. This could be because the company derives a major portion of its revenues from government orders, and any further budget cut in the United States might hurt the company’s growth prospects. Moreover, the stock's performance lagged compared with its peers like Boeing Company (BA - Free Report) , Airbus Group SE (EADSY - Free Report) and Leidos Holdings, Inc. (LDOS - Free Report) , which outperformed the industry.

Zacks Rank

General Dynamics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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