General Dynamics Armament and Technical Products ("GDATP"), a
General Dynamics Corporation
), has entered into an agreement, worth $224 million, with the
U.S. Army. Per the contract, the company will supply as well as
support the army's Hydra-70 rocket program. The company expects
to complete the deliveries by early 2015.
The deal consists of two contracts including the production of
Hydra-70 air-to-ground rockets with ticket size of $210.4 million
and engineering services valued $13.5 million.
General Dynamics will supply these rockets from its facilities at
Camden, Arkansas and Springboro, Ohio. The Army Contracting
Command in Redstone Arsenal, Alabama has ordered the rockets for
the U.S. Army.
GDATP supplies weapons, armament and vehicle survivability
systems to the U.S. armed forces and its partners. It also
manufactures several kinds of structures for the commercial,
aerospace and defense markets.
GDATP is the system integrator of the Hydra-70 family of rockets.
The 2.75-inch diameter rockets have two major parts: the MK66
rocket motor and cargo warheads to employ against targets. In
addition, these rockets provide the user with a fatal and
lightweight weapon system with multi-mission capacity.
Since the introduction in 1996, this rocket has been sold to
several domestic as well as international customers. In June
2011, GDATP received a contract, worth $286 million, from the
U.S. Army to manufacture the Hydra-70 air-to-ground rocket. These
rockets' proven track record enables General Dynamics to become
the trusted supplier for national as well as international
General Dynamics reported fourth-quarter 2012 earnings of $1.39
per share, missing the Zacks Consensus Estimate of $1.90 per
share. The reported figures were below the year-ago figure of
$2.20 per share. The results reflect the negative impact of the
Since the U.S. Department of Defense is one of the key clients of
General Dynamics, any further cutback in the U.S. defense budget
could limit the company's growth prospects. Due to this issue,
the company has already experienced a 10.7% year-over-year drop
in the fourth-quarter 2012 total backlog of $51.3 billion. In
addition, a higher level of competition from a number of players
in each of its business segments is our major concern.
However, we believe the company's capability to obtain consistent
contracts will improve the top line going forward.
General Dynamics Corporation currently has a Zacks Rank #3
(Hold). Other stocks from the industry we presently prefer are
Zacks Ranked #1 (Strong Buy)
Huntington Ingalls Industries Inc.
), and Zacks Ranked #2 (Buy)
The Boeing Company
) as well as
Lockheed Martin Corporation
BOEING CO (BA): Free Stock Analysis Report
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