Electric Boat, a wholly owned subsidiary of
General Dynamics Corporation
), has received a contract modification to continue the
development of the Common Missile Compartment for the U.S. Ohio
Replacement Program and the United Kingdom's Successor
ballistic-missile submarine. The contract is worth $12.8 million.
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Per the contract, the company will be responsible for procurement
of prototype material and equipment that is required for the
production of the Common Missile Compartment.
Originally, the company had received the contract in Dec 2008 for
engineering, technical services, concept studies and design of a
Common Missile Compartment for the next-generation ballistic
missile submarines being developed for the U.S. Navy and the
Royal Navy. The contract provided options, which if exercised,
would bring the contract value to $776 million.
Recently, in Jan 2013, the company received a contract to perform
research and development work for the next-generation strategic
deterrent submarine under the Ohio Replacement Program.
Simultaneously, the company also was supposed to continue the
development of Common Missile Compartment for Ohio Replacement
submarines and the UK Successor-class ballistic-missile
submarine. Common Missile Compartment is jointly owned by the
U.S. Navy and Royal Navy. Prior to that in November 2012, the
company had received a contract for the same.
The current contract brings the contract value to more than $770
million. The contracts are received as a result of the company's
proven technical capabilities. The employees working under this
contract covers all aspects of the submarine life cycle, which
includes concept formulation and design through construction,
maintenance and modernization, and finally inactivation and
Based in Falls Church, Virginia, General Dynamics engages in
mission-critical information systems and technologies; land and
expeditionary combat vehicles, armaments and munitions;
shipbuilding and marine systems; and business aviation.
General Dynamics' revenue exposure is spread over a broad
portfolio of products and services in business aviation that
allows it to keep the overall growth momentum steady. Key growth
drivers for the company include improving business jet market,
stable business of U.S. military vehicles and strong cash flow
On Jan 23, 2013, General Dynamics is expected to release its
fourth quarter and full year 2012 results. The Zacks
Consensus Estimates for fourth quarter 2012 and full year 2012
are currently at $1.92 per share and $6.97 per share,
Like all defense majors, the future prospects of the company are
tied to the U.S. defense budget. With the possibility of a
cut in the defense budget, the company presently retains a
short-term Zacks Rank #3 (Hold) that corresponds with our
long-term Neutral recommendation on the stock.
Some of its main competitors are
Lockheed Martin Corporation
Northrop Grumman Corporation
Huntington Ingalls Industries, Inc.