) unit, General Dynamics Information Technology, has clinched a
deal with the Department of Homeland Security ("DHS") and other
federal agencies to provide cybersecurity services.
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The company numbers among the 17 companies that have been
considered for the Continuous Diagnostics and Mitigation ("CDM")
program potentially worth $6 billion. Other awardees include
International Business Machines Corp.
Lockheed Martin Corp.
Northrop Grumman Corp.
) among others.
Per the five-year contract, General Dynamics will provide DHS,
federal, state, local and tribal governments with continuous
monitoring tools and services, which are essential to strengthen
the security of government networks.
The CDM program - also referred to as Continuous Monitoring as a
Service ("CMaaS") - aims to offer proficient information
technology tools and services to combat cyber threats in the
civilian ".gov" networks and many other network endpoints like
mobile devices. General Dynamics will evaluate and fight cyber
risks and also support the launch of DHS' CDM program.
General Dynamics engages in mission-critical information systems
and technologies; land and expeditionary combat vehicles,
armaments and munitions; shipbuilding and marine systems; and
General Dynamics' revenue exposure is spread over a broad
portfolio of products and services that keep the overall growth
momentum intact. With back-to-back Department of Defense (DoD)
contracts, though small in size, the company seems to be well
positioned to generate a steady revenue stream. Recently, General
Dynamics won a contract worth $56 million from the U.S. military
to provide support services for Iraqi M1A1 Abrams tanks. Per this
modification contract, General Dynamics will continue providing
logistics and base lifecycle support services to Iraqi M1A1
Again, in August, the defense major received a $562.2 million
contract from the DoD to supply Ground Mobility Vehicles 1.1 (GMV
1.1), a modified Humvee.
The company registered a positive earnings surprise of 11.73% in
the second quarter. The positive results and consistent contract
wins have driven the Zacks Consensus Estimate for 2013 2.9%
higher in the last 60 days to $6.96 per share, reflecting
year-over-year growth of 7.3%.
However, our apprehensions regarding defense budget cuts still
remain, which can weigh on future operating results. General
Dynamics currently retains a Zacks Rank #3 (Hold).