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General Dynamics' Unit Wins Arms Deal for Stryker Vehicles

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General Dynamics Corp.’s (GD - Free Report) Land Systems business unit recently secured a $25 million contract for upgrading Stryker flat-bottom vehicles to the Double V-Hull configurated version. Work related to the deal is scheduled to be completed by Apr 30, 2021.

The contract was awarded by the U.S. Army Contracting Command, Warren, MI. The company will execute the task at Sterling Heights, MI.

Stryker Vehicle’s Specifications

The Stryker Family of armored combat vehicles provides the U.S. Army with an effective mix of capabilities, including infantry transport, offensive firepower and reconnaissance. The Stryker's other capabilities include the anti-tank guided missiles, mobile C4ISR, engineering and fire support, mobile gun system, and medical evacuation.

The vehicle’s new Double V-Hull design leads to staggering improvements in soldier survivability, providing protection in open terrains.

What Favors General Dynamics?

With widespread geo-political tension across the globe, many nations are strengthening their arsenals and taking initiatives to upgrade land-combat military vehicles. Being the largest exporter of defense weaponries worldwide, the United States is witnessing increased demand for such combat vehicles. As a prominent contractor in the U.S. wheeled military vehicle market, General Dynamics is enjoying a solid contract inflow for its combat vehicles. The latest contract win is a bright example of that.

Meanwhile, the fiscal 2019 defense budget, approved by the U.S. Senate in June 2018, provisions for a spending plan of $5.8 billion on Ground Systems. Such robust budgetary allotments must have encouraged the Pentagon to offer more awards related to wheeled combat and armored vehicles to defense contractors like General Dynamics. More such contracts like the latest one can be expected in coming days.

Solid Growth Prospects

Per Markets and Markets, the Global Armored Vehicles Market is expected to witness a CAGR of 5.6% from 2016-2021. This upside can be attributed to the rise in commercial security awareness, which, in turn, will increase demand for personnel armored vehicles over the period. Apart from rising incidences of armed conflicts, violence and terrorism, increasing defense budgets — particularly in Asia-Pacific and the Middle East — are also anticipated to drive growth. Such prospective growth should enable General Dynamics to strengthen its foothold in the expanding market.

Price Movement

In a year’s time, General Dynamics has lost 2.5% against its industry’s 22.9% growth. The underperformance may have been caused by intense competition that the company faces in the Aerospace-Defense space.

Zacks Rank & Stocks to Consider

General Dynamics currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are Huntington Ingalls Industries (HII - Free Report) , Curtiss-Wright Corporation (CW - Free Report) and Heico Corporation (HEI - Free Report) . While Huntington Ingalls and Curtiss-Wright sport a Zacks Rank #1 (Strong Buy) and Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls pulled off an average positive earnings surprise of 9.48% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 6.4% north to $17.24 in the past 90 days.

Heico Corporation came up with an average positive earnings surprise of 2.15% in the preceding four quarters. The Zacks Consensus Estimate for 2018 earnings has climbed 2.73% to $1.88 in the past 90 days

Curtiss-Wright Corporation delivered an average positive earnings surprise of 22.27% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 9% to $6.15 in the past 90 days.

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