General Dynamics Corporation
) unit General Dynamics Land Systems-Canada has entered into an
agreement, worth $65.3 million, with the Colombian Ministry of
National Defense to supply 24 Light Armoured Vehicles ("LAVs").
General Dynamics Land Systems - Canada is a part of General
Dynamics Corporation's Combat Systems business group. This unit
provides light armoured vehicle platforms and sub-system
integration. It also offers re-role, upgrade and repair services.
The Colombian Ministry of National Defense has ordered the
vehicles for the Colombian Army. Per the contract, the company
will provide the Colombian Army the LAV III version vehicles. The
company expects to complete the deliveries by May 2014.
The LAV III armored vehicle is the latest in the Generation III
Light Armored Vehicle (LAV) series. The vehicle has higher
load-carrying and protection capacity and double-V hull ("DVH")
technology. This new underbody design enables to protect vehicles
and army men, who are inside, from mine blasts, improvised
explosive devices ("IEDs") and several other threats.
Since the introduction, this vehicle has been sold to several
domestic as well as international customers. This vehicle has
been deployed for numerous operations in the Balkans, Africa and
Afghanistan. To date, over 4,200 vehicles have been ordered, with
the majority being for the U.S. Army.
In December 2012, the company received a contract, worth $9.5
million, from the Government of Canada to define, analyze and
choose an enhanced surveillance suite for integration of Canadian
LAV III Upgrade vehicles.
As General Dynamics' one of the main clients are the U.S.
Department of Defense, any cutbacks in the U.S. defense budget
could limit the company's future growth prospects. Due to this
factor, the company has already experienced a 9.8% year-over-year
drop in third-quarter 2012 total backlog to $9.4 billion. In
addition, higher level of competition from a number of players in
each of its business segments is our major concern.
General Dynamics' strong negative factors propel us to have a
short-term Zacks Rank #4 (Sell). One of its peers
Lockheed Martin Corporation
) has a short-term Zacks Rank #3 (Hold).
Falls Church, Virginia-based General Dynamics engages in
mission-critical information systems and technologies; land and
expeditionary combat vehicles, armaments and munitions;
shipbuilding and marine systems; and business aviation.
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