General Dynamics Corp.
) business wing General Dynamics Armament and Technical Products
has received a U.S. Army modification contract worth $67.5
million for the production of Hydra-70 air-to-ground rockets.
With this contract extension, the total value of the contract
exceeds $1 billion.
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In Feb 2013, the company had received a contract worth $224
million for the production of Hydra-70 air-to-ground rockets and
for engineering services in support of the Hydra-70 rocket
General Dynamics Armament and Technical Products 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.
Hydra rockets can be used on most helicopters and some fixed wing
aircraft. These rockets employ a variety of warheads in order to
meet a wide range of mission requirements for all departments of
the U.S. military and select allies. The deliveries of the
Hydra rockets are expected to be accomplished by 2015 end. The
Army Contracting Command in Redstone Arsenal, Ala. is the
General Dynamics' revenue exposure is spread across a broad
portfolio of products and services that keep the overall growth
momentum steady. Last month, the company posted strong second
quarter results on the back of a steady flow of orders and an
effective cash deployment strategy. The company received orders
for every Gulfstream aircraft model which reflects continued
demand across its portfolio of business-jet products.
The company strives to retain its competitive edge and drive
profitability in its businesses. Recently, the company
announced that General Dynamics Armament and Technical Products
will be consolidated into General Dynamics Ordnance and Tactical
Systems. General Dynamics Ordnance and Tactical Systems is a unit
of Combat Systems.
Despite these positives, we prefer to remain on the sidelines
given the threat of the ongoing sequester impacting the
performance of the company like all other defense majors. The
company presently retains a short-term Zacks Rank #3 (Hold).
Among the stocks worth considering in the space are
Lockheed Martin Corp.
Northrop Grumman Corp.
Huntington Ingalls Industries, Inc.
), all with a Zacks Rank #2 (Buy).