General Dynamics One Source, a unit of General Dynamics Corporation (GD), has received a one-year contract from the Defense Information Systems Agency (“DISA”) to support the Services Directorate Enterprise Data Center Enterprise Backup, Mainframe and Server Services Program of U.S. Army Information Technology Agency (“USAITA”). The contract with one option year is worth $20.2 million if all options are exercised.
General Dynamics Information Technology, General Dynamics Advanced Information Systems and General Dynamics C4 Systems together form General Dynamics One Source.
Per the contract, Information Technology Agency users worldwide will benefit from unclassified and classified mainframe computerized processing provided by the company. Moreover, it will act as the management of server and application hosting and storage services. Under the contract, the company will provide yardstick to measure performance and develop a solution that will be well designed to help the directorate to migrate to a service-oriented structure.
This is not the first time that the company is supporting USAITA. It has been with the agency for more than 15 years. Again with this new contract, the company will continue to enhance data center operations with its in-depth knowledge and experience.
Contracts are continuously flowing in for the company. This month itself, the company received a contract worth $78 million from the U.S. Navy for supplying long lead-time material for the Virginia-class submarine SSN-792. It also received a five-year U.S. Army contract with a potential value of $64.5 million if all options are exercised. This would ultimately result in incremental revenue generation. Moreover, its stable business of U.S. military vehicles, the ongoing share repurchase program and strong cash flow generation would yield better results.
The company, on the flip side, is largely tied to the U.S. defense budget, where the threat of budget cuts is high. Also, we are slightly cautious about the risks related to the execution of key projects.
The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.
Based in Falls Church, Virginia, General Dynamics Corporation engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company mainly competes with The Boeing Company (BA) and Lockheed Martin Corporation (LMT).
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