How Will General Dynamics (GD) Stock React To $5.76 Billion Contract For British Army Vehicles?

NEW YORK (TheStreet) -- General Dynamics Corp. (GD)  secured a $5.76 billion contract to build armored vehicles for the British army in the largest order for such equipment in 30 years, the Wall Street Journal reports.

The deal was announced today by the British defense ministry, before the U.K. hosts a summit of NATO members in Wales, that will see General Dynamics build 589 Scout Specialist Vehicles. The company had previously won a competition to develop and demonstrate the system, the Journal said.

The U.K. now projects first delivery of the vehicle in 2017 and that they will be ready for deployment in 2020. It replaces vehicles that have been in service 40 years.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Shares of General Dynamics are down -0.37% to $122.21 in pre-market trade.

TheStreet Ratings team rates GENERAL DYNAMICS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate GENERAL DYNAMICS CORP (GD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 48.93% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 51.12% to $875.00 million when compared to the same quarter last year. In addition, GENERAL DYNAMICS CORP has also vastly surpassed the industry average cash flow growth rate of -19.61%.
  • GENERAL DYNAMICS CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GENERAL DYNAMICS CORP turned its bottom line around by earning $7.03 versus -$1.03 in the prior year. This year, the market expects an improvement in earnings ($7.52 versus $7.03).
  • GD's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that GD's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • You can view the full analysis from the report here: GD Ratings Report
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE

More from Markets

Dow Futures Plunge, Global Markets Rocked as Trump Takes Trade War to Next Level

Dow Futures Plunge, Global Markets Rocked as Trump Takes Trade War to Next Level

Asia Markets Fall on Latest Tariff Threats From Trump

Asia Markets Fall on Latest Tariff Threats From Trump

Google Invests in JD.com; Comcast-Disney Battle Nears Head -- ICYMI

Google Invests in JD.com; Comcast-Disney Battle Nears Head -- ICYMI

REPLAY: Jim Cramer on Tariff Worries, Oil, Alphabet and Centene

REPLAY: Jim Cramer on Tariff Worries, Oil, Alphabet and Centene

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes