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General Dynamics Wins $1.4B Deal to Support Stryker Vehicles

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General Dynamics Corporation’s (GD - Free Report) business unit, Land Systems recently secured a $1.36-billion contract for providing retrofit, damage repair and reset-refurbishment services to the Stryker Family of Vehicles. The contract was awarded by the U.S. Army Contracting Command, Warren, MI.

Work related to the deal is expected to get completed by Feb 28, 2024.

A Brief Note on Stryker Land Vehicle

General Dynamics’ eight-wheeled, armored combat vehicle is powered by a 350-horsepower Caterpillar JP-8 diesel engine that 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 newly launched double-V hull design leads to staggering improvements in soldier survivability, providing protection in open terrain areas.

What Favors General Dynamics?

With widespread geo-political tension around the globe, most nations are strengthening their arsenals and taking initiatives to upgrade land-combat military vehicles. Such initiatives taken on a global scale should boost General Dynamics’ growth as the company is one of the major players in the wheeled military vehicle market. In fact, during the company's fourth quarter earnings call, it mentioned the sudden rise in demand for its Stryker vehicles and munitions.

Notably, the fiscal 2019 defense budget provisions for a spending plan of $5.8 billion on Ground Systems. Such robust budgetary allotments must have encouraged Pentagon in offering pivotal awards to defense contractors like General Dynamics, in relation to wheeled combat and armored vehicles. The latest contract win is one such example.

Looking Ahead

Per Markets and Markets, the Global Armored Vehicles Market is expected to see a CAGR of 3.3%, from 2018 to 2023. Such growth can be attributed to the rising incidences of armed conflicts among nations, sporadic spread of terrorism and increasing defense budgets, particularly in Asia-Pacific and the Middle East. Thanks to the presence of combat-proven military vehicles in its portfolio, General Dynamics can be projected to significantly gain in this expanding market.

Price Movement

General Dynamics’ share price has lost 11.2% in the past six months.

Zacks Rank & Stocks to Consider

General Dynamics currently carries a 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 11.3% to $20.13 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 2.47% to $7.47 in the past 90 days.

Heico Corporation’s long-term growth estimates currently stand at 12.10%. The Zacks Consensus Estimate for 2019 earnings has risen 4% to $2.08 in the past 90 days.

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