General Dynamics Electric Boat, a subsidiary of
General Dynamics Corporation
), has received a contract modification from the U.S. Navy worth
$117.8 million for the development of submarines and undersea
This contract is a modification of an earlier agreement entered
in November 2010 worth $35.9 million. Per the original contract,
the company had to develop advanced submarine technologies. It had
announced that if all options are exercised and funded, the
contract would have a potential value of $711.4 million over five
The present contract calls upon the company to develop superior
submarine technologies for existing as well as forthcoming marine
platforms. In order to support the wide range of technology areas
that include preservation, proper maintenance and survivability of
hydro dynamics, acoustics and materials, the company will carry out
advanced submarine research and development studies.
Additional areas where the company will deploy research and
development work include manning, hull integrity, performance, ship
control, logistics, weapons handling and safety.
General Dynamics is engaged in mission-critical information
systems and technologies, land and expeditionary combat vehicles,
armaments and munitions and shipbuilding and marine systems. The
company has been looking after the Virginia-class submarines for a
long time now. The current contract also includes task for
near-term Virginia-class technology insertion, identification of
Ohio-class replacement technology options, future submarine
concepts and core technologies.
The company is deeply involved in performing various task orders
for shipbuilding and marine systems. Recently, it 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 that it had received in July 2010.
Besides, the company's revenue exposure that is spread over a
broad portfolio of products and services, its improving business
jet market, its stable business of U.S. military vehicles, ongoing
share repurchase program and strong cash flow generation place it
in a better position in comparison to its peers.
However, the risks related to budget cuts and execution of key
projects are a matter of concern for the company. Like its peers,
Lockheed Martin Corporation
), the company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the
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