General Dynamics Corporation
) unit General Dynamics Electric Boat (GDEB) has received a
5-year Indefinite Delivery/Indefinite Quantity (IDIQ) contract,
worth $215.5 million, from the U.S. Navy.
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Per the agreement, the company will operate under the navy's
submarine safety (SUBSAFE) program and offer maintenance support
for the submarines. GDEB will provide tools, facilities and other
necessary supports for installation, repair and maintenance of
electrical and mechanical equipments, and weapons.
General Dynamics' GDEB segment is a part of its Marine Systems
group. This business vertical designs and manufactures a wide
array of ships for the U.S. Navy and its other commercial
customers. GDEB has fixed the standard of excellence for drawing,
creation and lifecycle support of the navy's ballistic missile
and attack submarines.
The SUBSAFE program is an operating as well as casualty control
measures initiated by the U.S. Navy after the defeat of the USS
Thresher (SSN-593) in 1963. This program includes implementation
of reliable maintenance and material requirements, and emergency
Over the years, General Dynamics has a long-standing business
association with the U.S. Navy and tries to meet its commitments
in terms of maintaining products and services standard along with
delivery timing. Few days ago, the company received an agreement
modification, worth $41.6 million, from the U.S. Navy to perform
routine preservation and upgrade its Los Angeles-class attack
submarine the USS Hartford (SSN-768).
As the U.S. Department of Defense is one of the key customers of
General Dynamics, any further U.S. defense budget cutbacks could
limit the company's future growth prospects. We believe this
factor is one of the main reasons for the drop in Marine Systems
group's total backlog by 7.6% year over year to $17.1 billion in
However, we believe that the company's capability to obtain
consistent contracts from national as well as international
clients, particularly from the U.S. Navy will improve the top
line going forward.
General Dynamics Corporation currently has a Zacks Rank #3
(Hold). Other stocks from the industry we presently prefer are
Zacks Rank #2 (Buy)
Alliant Techsystems Inc.
The Boeing Company
Lockheed Martin Corporation