General Dynamics Electric Boat, a subsidiary of
General Dynamics Corporation
(
GD
), has received a $6.8 million contract modification for designing
and procurement of a common controller for various shipboard
functions on Virginia-class submarines.
This modification contract is a part of an overall engineering
contract supporting the Virginia-class submarine program. In July
2010, the company had received a $171.8 million contract to provide
lead-yard services for Virginia-class nuclear-powered attack
submarines from the U.S. Navy. Per the contract, the company had to
look after the maintenance and update of design drawings and data
for each Virginia-class submarine. If all options are exercised and
funded, the contract would have a potential cumulative value of
$881 million through 2014.
The Virginia-class submarine program is a class of
nuclear-powered fast attack submarines in service with the U.S.
Navy. These submarines are designed for a broad spectrum of
open-ocean and littoral missions. Moreover, they are less costly
than Seawolf class attack submarines. Due to their technical
excellence and schedule performance, they assist the Navy in
dominating both the open ocean and the littorals.
In partnership with the Navy, Electric Boat has been
successfully pursuing its goal to reduce ship costs while focusing
on improvement in overall efficiency. In April this year Electric
Boat also received a contract worth $78 million from the U.S. Navy
for supplying long lead-time material for the Virginia-class
submarine SSN-792.
Based in Falls Church, Virginia, General Dynamics is engaged in
mission-critical information systems and technologies; land and
expeditionary combat vehicles, armaments and munitions;
shipbuilding and marine systems; and business aviation. It is well
equipped to build nuclear-powered submarines in the U.S. With its
diversified revenue exposure, we expect to keep the overall growth
momentum steady.
However, we are concerned as the company is largely tied to the
U.S. defense budget, where the threat of budget cuts is high. Also,
we have turned slightly cautious about the risks related to the
execution of key projects.
Like
Textron Inc.
(
TXT
) and
The Boeing Company
(
BA
), the company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the
stock.
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis Report
TEXTRON INC (TXT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research