Today's Research on General Dynamics and Smith & Wesson: The Industry Gets
Ready for Sequester
LONDON, February 22, 2013
LONDON, February 22, 2013 /PRNewswire/ --
While a last-minute deal reached at the start of this year helped in averting
the fiscal cliff, political bickering has meant that sequester is likely to
take effect on March 1 ^st . If lawmakers fail to reach an agreement on
reducing U.S.'s deficit in the next few days, sequester would result in
significant cuts in defense spending. Companies in the Aerospace/Defense
Products & Services such as General Dynamics Corporation (NYSE: GD) and Smith
& Wesson Holding Corporation (NASDAQ: SWHC) are still hoping for a last-minute
deal. StockCall professionals have completed their technical analysis on
General Dynamics and Smith & Wesson Holding and these free reports are
accessible by registering at http://www.stockcall.com/research
Defense Spending Cuts
At the start of this year, lawmakers reached an agreement that helped in
averting the fiscal cliff. While the deal was welcomed by market participants,
it did not resolve the spending cuts issue. Lawmakers now have a week to
resolve the spending cuts issue. If they do not, automatic spending cuts known
as sequester will take effect on March 1 ^st .
The sequester refers to $85 billion in spending cuts. A major portion of the
cuts will be made in defense spending. The Pentagon has already warned that
sequester could lead to large scale layoffs and furloughs.
The U.S. is the largest aerospace and defense market in the world. The
industry relies very heavily upon the U.S. government contracts. Therefore any
cuts in defense spending are not good news for aerospace and defense
While lawmakers now only have a week, a last-minute deal cannot be ruled out.
If a last-minute deal is reached and the sequester is averted, it would be a
positive for aerospace and defense companies.
International Market and Consolidation
In case there is no deal before the March 1 ^st deadline, aerospace and
defense companies will have to look to international markets to offset the
negative impact of defense spending cuts in the U.S. Another trend that could
emerge as a result of spending cuts is consolidation in the industry, as
companies would look to cut costs in the wake of cuts in U.S. military budget.
General Dynamics Wins Contracts
Despite the looming threat of sequester, General Dynamics has won some major
contracts in the last one month. Earlier this month, the company announced
that the U.S. Navy awarded General Dynamics Electric Boat a $41.6 million
contract modification to perform routine maintenance and modernization work on
the USS Hartford. Sign up for the free technical research on General Dynamics
Corp. at http://www.StockCall.com/GD022213.pdf
Last month, the company had announced that its General Dynamics Information
Technology business unit was awarded a contract by the City of Los Angeles
General Dynamics Corp. reported non-GAAP earnings from continuing operations
of $491 million, or $1.39 per share, for the fourth quarter of 2012. The
company's revenue for the quarter was $8.1 billion.
Smith & Wesson Holding Corporation's Results Eyed
Investors are now eyeing the results of Smith & Wesson Holding Corporation,
which are scheduled to be released on March 5, 2013. Be sure to read our
latest technical research on Smith & Wesson Holding Corp. by registering at
Back in December, the company had reported record results for the second
quarter of fiscal year 2013. James Debney, President and CEO of Smith & Wesson
Holding Corporation, said that the company's strong results reflect the
ongoing successful execution of its strategic plan.
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