General Dynamics GD announced that it has been awarded a $14.9 million contract by the U.S. Army Contracting Command, Yongsan, Korea.

Details of the Contract

This is a modification contract per which the company will provide support and maintenance services for the combined mission command network operations.

Work related to this deal will be carried out in the Republic of Korea and is expected to be over by Jul 31, 2018. The contract amount will be obligated at the time of the award from the fiscal 2017 operations and maintenance (Army) funds.

Our View

President Donald Trump’s proposed 10% hike on the 2018 defense budget has boosted the overall defense sector. Moreover, due to rise in global terrorism many non-U.S. countries have raised their defense budget lately.

As a result, General Dynamics along with other defense giants such as Lockheed Martin LMT, The Boeing Company BA and Northrop Grumman Corp. NOC have been receiving regular contracts from different verticals of the U.S. Military.

In particular, General Dynamics’ diverse product portfolio along with its spread-out customer base has provided it with opportunities to generate revenues from different sources. Moreover, the company has been consistently witnessing increased sales from non-U.S. based sources. These sources have helped General Dynamics to counter the volatility in domestic defense spending.

Further, the company has a strong research and development segment that promotes the introduction of new products and first-to-market enhancements. General Dynamics’ wider customer choices, improved aircraft performance and new standards for customer safety, comfort and in-flight productivity are expected to boost its growth trajectory, over the long run.

Price Movement

Share price of General Dynamics has rallied 39.6% in the last one year, outperforming the Zacks categorized Aerospace-Defense industry’s gain of 26.5%.

This could be because General Dynamics consistently maintains a strategic alliance with the U.S. Department of Defense, which allows it to enjoy a steady flow of contracts.

Zacks Rank

General Dynamics 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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