General Dynamics' (GD) Unit Wins $430M U.S. Census Deal

Aerospace and defense multinational General Dynamics Corp.’s (NYSE:GD) business unit – General Dynamics Information Technology – recently won a five-year contract to support the 2020 Census Questionnaire Assistance (CQA) program. Valued at $430 million, this contract was awarded by the U.S. Census Bureau.

The Contract

As per the terms of this single-award contract, General Dynamics will offer support for the 2020 CQA’s contact-center systems and operations. As a result of this deal, the CQA program will be able to utilize General Dynamics Information Technology’s Customer Experience Platform solution (CXP), provider of next-generation contact center services.

Apart from delivering this advanced contact center platform, General Dynamics Information Technology unit will also hire and train new staff for smooth running of operations, as well as offer equipment and facilities to perform technology integration and testing. This in turn will help the CQA program to develop a multi-channel, multi-lingual contact center.

Also, with the CQA program being a key component of the 2020 Decennial Census, management at General Dynamics expects its cutting-edge customer experience solution to boost the operations of the U.S. Census Bureau; on account of this contract.

A brief note on CXP

Customer Experience Platform solution (CXP) is the first FedRAMP-compliant cloud-based contact center solution. Launched in Mar 2010, this platform facilitates government agencies and organizations to operate highly scalable and customized contact centers, in sync with a particular organizations security and privacy requirements.

This five-year contract marks the second deal General Dynamics Information Technology (GDIT) unit has inked with the U.S. Census Board. Earlier, this business unit successfully managed more than 75 million census forms and conducted over 11.5 million citizen-contact operations for the 2010 census.

Our View

GDIT represents one of the two units within General Dynamics’ Information Systems & Technology (IS&T) business segment and has been a trusted systems integrator for more than 50 years. Apart from delivering next-generation healthcare IT services, Enterprise IT infrastructure and Network operations, as well as professional and technical services, this unit offers world-class data-center security solutions.

Notably, GDIT has successfully implemented the U. S. Department of Defense’ (DoD) largest enterprise-wide email infrastructure, which currently represents one of the largest independent email systems in the world. Going ahead, management expects to achieve revenues of $9 billion and operating margins of more than 10.5% for 2016 in the IS&T segment, with a significant share coming from the GDIT unit.

We believe the $430 million contract will act as a major contributor to the revenue expected from this segment. Given the proven expertise of this business unit, surely the 2020 CQA program will significantly benefit from the CXP services it will receive on account of this deal.

Zacks Rank and Stocks to Consider

General Dynamics currently carries a Zacks Rank #2 (Buy). A few better-ranked stocks in the aerospace and defense sector include Engility Holdings, Inc. (NYSE:EGL) , Leidos Holdings, Inc. (NYSE:LDOS) and Ducommun Inc. (NYSE:DCO) .

Engility sports a Zacks Rank #1 (Strong Buy) and has witnessed an 8.26% surge in its last five days’ stock price. On average, the company delivered a positive earnings surprise of 12.09% in the trailing four quarters.

Ducommun sports a Zacks Rank #1 and has witnessed a 3.40% surge in its last five days’ stock price. The company witnessed a 9.4% rise in its current year consensus estimates during last 60 days.

Leidos Holdings sports a Zacks Rank #2 and has witnessed a 3.44% surge in its last five days’ stock price. The company witnessed a 9.6% rise in its current year consensus estimates during last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

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