General Dynamics Corporation
) business wing, General Dynamics Advanced Information Systems,
has received a U.S. Navy performance-based logistics ("PBL")
contract for the support of the Advanced Mission Computers
("AMC") in the Navy's F/A-18 Hornet and AV-8B Harrier aircrafts.
The contract is valued at $31.5 million.
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This contract calls for General Dynamics to perform repair work
of the AMCs for the F/A-18E, F/A-18F and EA-18G aircraft.
Additionally, the company will develop the mission computer
systems for the AV-8B model.
The AMC − a tough integrated information processing system − is
assembled with commercial off-the-shelf products. It is a
high-performance, high-reliability mission and display-processing
system. It provides situational awareness and combat systems
control to the flight crew. Further, these computers are capable
of processing high-speed data flows from the latest sensor
technologies. The system is used for input/output, video, voice
and graphics processing and can perform tasks in extreme
General Dynamics has been delivering F/A-18 AMCs since 2002. Over
the years, the requirements for AMCs have expanded to include
equipping the Navy to retrofit operational aircraft to extend the
life of the jets. The latest contract will be performed at the
General Dynamics facility in Bloomington, Minn.
Based in Falls Church, Va., General Dynamics is one of the
leading companies in business aviation, information systems and
technologies, shipbuilding and marine systems, and land and
amphibious combat systems, as well as armaments and munitions.
General Dynamics Advanced Information Systems, a unit of
Information Systems and Technology, provides intelligence,
surveillance and reconnaissance solutions across all domains. The
segment is progressing well with a number of contracts. Backlog
of orders was down in all segments in the first quarter of 2013
except for the Information Systems and Technology Aerospace
In April this year, this unit received a contract to produce
Type-3 AMC for the F/A-18E/F and E/A-18G Super Hornet aircraft.
The contract, awarded by the U.S. Navy, is valued at roughly
We view General Dynamics as a well-run company that is likely to
continue delivering on expectations, driven by revenue growth,
margin expansion and cash flow generation. However, an uncertain
political landscape makes future defense budgets vulnerable to
cutbacks. Additionally, the falling overall order backlog is a
headwind for the company.
General Dynamics presently retains a Zacks #3 Rank (Hold).
Well-placed stocks in the defense industry include Zacks Ranked
Erickson Air-Crane Inc.
) and Zacks Ranked #2 (Buy)
Northrop Grumman Corporation
Wesco Aircraft Holdings, Inc.