General Dynamics (GD) Wins $4.5B Deal Involving Geospatial Intelligence

General Dynamics Corp.’s GD business unit, General Dynamics Information Technology (GDIT), recently won the User Facing and Data Center Services (UDS) contract. It is a 10-year ordering period agreement.

Details of the Deal

With a maximum value worth $4.5 billion, this contract has been awarded by the National Geospatial-Intelligence Agency (NGA). Per the terms of the deal, GDIT will provide hybrid cloud services, including commercial clouds and data centers, and innovative IT design, engineering, implementation and operations and sustainment to NGA and its mission partners.

The company will advance geospatial intelligence capabilities and support global users by delivering a full range of enterprise services, like application services, high-performance computing, virtual desktop, unified communications, DevOps, Platform as a Service, and mobile secure wireless across multiple networks and agency locations worldwide

General Dynamics & Geospatial Intelligence

General Dynamics has more than 25 years of innovating and evolving Geospatial Intelligence (GEOINT) services to meet the needs of its customers in the global defense, civilian and commercial markets. The company is at the forefront of automating the GEOINT environment and integrating intelligence operations.

The company’s core competencies include Motion GEOINT Services, enterprise workflow, mission management capabilities, and machine learning. It offers a wide range of services like providing actionable intelligence for the warfighter overseas, domestic natural disaster response teams and many more.

Notably, the United States’ NGA enables the U.S. intelligence community and the Department of Defense (DOD) to fulfill the president’s national security priorities to protect the nation. It is the lead federal agency for GEOINT and manages a global consortium of more than 400 commercial and government relationships.

As NGA expands and strengthens its operations, amid the global geopolitical uncertainty, considering General Dynamics’ proven expertise in GEOINT, the company stands to gain in the form of a solid inflow of contracts involving various GEOINT aspects like the latest one. Such contracts should boost GD’s revenues in the coming days.

Prospects

With modern military strategies nowadays heavily dependent on strategic intelligence, geospatial information plays the part of one of the most crucial players in strategic intelligence. So no doubt the market for the same is booming. Per Markets and Markets, the geospatial analytics market size is projected to grow from $59.5 billion in 2021 to $107.8 billion in 2026, at a CAGR of 12.6%.

While GDIT is set to benefit significantly from this growing market, other defense players like Lockheed Martin LMT, L3Harris Technologies LHX and BAE Systems BAESY, which have a strong presence in this space, are also set to gain from this market’s growth trends.

For instance, in 2015, Lockheed Martin along with Esri deployed commercial software to the Amazon Web Services Commercial Cloud Services (C2S) environment for the first time with the NGA in a move that enabled government agencies to better share geospatial intelligence. The deployment of the portal for Esri's ArcGIS geographic information system (GIS) provided a single environment for analysts to securely organize and share data throughout the intelligence community and DoD. In 2021, LMT won a contract to support the Australian Geospatial Intelligence Organisation’s (AGO) “South COAST” program.

LMT boasts a long-term earnings growth rate of 5.7%. The Zacks Consensus Estimate for its 2022 earnings implies an improvement of 18.4% from the 2021 reported figure.

L3Harris offers a suite of data management tools in support of curating, retrieving, and discovering geospatial content across multiple closed and commercial source environments. For 20-plus years, L3Harris has successfully developed and deployed geospatial intelligence search, retrieval and data management capabilities and performed system modernization upgrades for defense and intelligence agencies.

LHX boasts a long-term earnings growth rate of 4.4%. The Zacks Consensus Estimate for 2022 earnings implies an improvement of 4.9% from the 2021 reported figure.

BAE Systems develops geospatial-intelligence software for data management, image exploitation, geospatial production and intelligence reporting. Its SOCET GXP is a geospatial-intelligence software package that uses imagery from satellite and aerial sources to identify and analyze ground features quickly.

The Zacks Consensus Estimate for BAESY’s 2022 sales suggests an improvement of 35.4% from the 2021 reported figure. The Zacks Consensus Estimate for its 2022 earnings implies an improvement of 22.3% from the 2021 reported figure.

Price Movement and Zacks Rank

Shares of General Dynamics have gained 30.4% in the past year against the industry's decline of 34.5%.

Image Source: Zacks Investment Research

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.