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General Dynamics (GD) Wins $144M US BICES-X Maintenance Deal


General Dynamics Corp.’s GD subsidiary, General Dynamics Mission Systems, recently secured a $144-million contract for the operation, maintenance and expansion of the global U.S. Battlefield Information Collection and Exploitation System Extended (US BICES-X) federated trusted network environment infrastructure. Operations related to the deal will be carried out across multiple locations globally.

The contract was awarded by the Secretary of the Air Force, Concepts, Development, and Management Office, Pentagon, Washington, DC. General Dynamics will utilize fiscal 2018 operations and maintenance funds to partially finance the task. Work related to the deal is scheduled to be completed by Mar 31, 2024.

A Brief Note on US BICES-X

The global US BICES-X is a communication system that provides U.S. forces, NATO and other military organizations with near-real-time, correlated, situation and order of battle information. US BICES-X extends these capabilities across the Department of Defense to the different combatant commands.

What is Favoring General Dynamics?

Due to rising security threats, the defense budget funding’s focus has shifted toward upgrading existing capabilities and emphasizing on ISR, cyber security and space technology. Such macroeconomic factors have been boosting General Dynamics’ growth prospects, in particular its Information Systems and Technology segment, which deals with communication systems. Evidently, the segment generated revenues of $2,487 million, up 9.5%, in the fourth quarter of 2017.

Moreover, General Dynamics being one of Pentagon’s prime contractors has been acquiring quite a few contracts from the Department of Defense of late. In February, its Mission Systems unit secured a $208-million contract for the delivery of the AN/USC-61(C) Digital Modular Radio (DMR). Such inflow of orders, including the latest one, will enable the segment to deliver similar encouraging performance in days ahead.

Its recent acquisition of CSRA Inc. is also poised to benefit General Dynamics massively. The deal makes the latter the largest provider of integrated information technology services to the federal government along with boosting its global workforce by more than 19,000 that will enable the company to speed up operations and upgrade its information systems for delivering cost-effective, next-generation IT solutions to the Department of Defense, the intelligence community and federal civilian agencies.

Price Movement

General Dynamics’ stock has returned about 15.6% in the past one year, compared with the broader industry’s gain of 45.7%. The underperformance may have been caused by the intense competition that the company faces in the aerospace-defense space.

Zacks Rank & Stocks to Consider

General Dynamics currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are Huntington Ingalls HII, Curtiss-Wright Corporation CW and Boeing BA. While Huntington Ingalls and Curtiss-Wright sport a Zacks Rank #1 (Strong Buy), Boeing carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls delivered an average positive earnings surprise of 3.85% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by $4.94 to $17.38 in the last 90 days.

Curtiss-Wright recorded an average positive earnings surprise of 15.06% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 52 cents to $5.79 in the last 90 days.

Boeing posted an average positive earnings surprise of 20.69% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by $2.45 to $14.05 in the last 90 days.

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