General Dynamics (GD) Wins $24M Army Deal For Hydra Rockets

General Dynamics Corporation (NYSE:GD) announced that it has been awarded a $24-million contract by the U.S. Army. Per the terms of the order, the company will work on the modification of Hydra rockets. Work related to the contract will be carried out at the company’s Williston, VA facility and is expected to be completed by Nov 30, 2017.

Hydra-70 Rockets

Ordnance and Tactical Systems, a unit of General Dynamics, is the primary contractor for the Hydra rockets. Hydra-70 rockets are 2.75-inch unguided rockets that include unitary and cargo warheads. They can be used for point and area targets. The missiles are part of a lethal yet lightweight weapon system with multi-mission capability.

In August, the company was awarded another $60-million contract for the modification of Hydra-70 rockets. General Dynamics has manufactured more than four million Hydra-70 rockets since 1996 for the U.S. Army.

Regular Orders Boosting Portfolio

General Dynamics holds a strong position in the domestic as well as international defense space. In addition to being one of the two contractors in the world equipped to build nuclear-powered submarines, the other one being Huntington Ingalls Inc (NYSE:HII) , General Dynamics boasts a diverse product and service portfolio along with a wide customer base. This in turn allows this defense biggie to win notable contracts from both Pentagon and other U.S. allies.

To this end, last month, the company secured a contract worth $311 million to design, develop and integrate several engineering changes into the Abrams M1A2 SEP V3 battle tank. We expect such awards to bolster the company’s revenue growth in the coming days.

Defense Scenario Helping Industry Giants

The growing cross-border tension due to North Korea’s continuous nuclear tests along with radical terrorism has boosted the defense sector in the recent times. The recent budgetary amendments in the country have also favored defense giants like General Dynamics, The Boeing Company (NYSE:BA) and Lockheed Martin Corporation (NYSE:LMT) among others. These factors are expected to rake in more orders for these companies in the days to follow.

Moreover, the U.S. House passed fiscal 2018 defense policy bill worth $696.5 billion in July 2017. It includes $6 billion to boost Navy shipbuilding. If approved, this will also boost revenue growth for General Dynamics, one of the prime shipbuilders in the United States.

Price Movement

Shares of General Dynamics have rallied 33.1% in a year, underperforming the industry’s gain of 45.0%.

This may have been caused by the earlier budget cuts inflicted by the U.S. government in the defense space.

Zacks Rank

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

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