General Dynamics Electric Boat, a subsidiary of
General Dynamics Corporation
), has received a $100.4 million contract modification from the US
Navy to provide lead-yard services for Virginia-class
nuclear-powered attack submarines.
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Electric Boat will develop, maintain and update design drawings and
data, including technology insertions, for each Virginia-class
submarine throughout its construction and post-shakedown
The contract has a potential cumulative value of $881 million
through 2014 if all options are exercised and funded.
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.
Going forward, key growth drivers for the company include the
improving business jet market, its stable business of U.S. military
vehicles, an ongoing share repurchase program and strong cash flow
generation. However, the company is largely tied to the U.S.
defense budget, where the threat of budget cuts is looming. Also,
we are concerned about the risks related to the execution of key
The company presently retains a short-term Zacks #4 Rank (Sell). We
have a long-term Neutral recommendation on the stock.
General Dynamics is expected to release its third quarter 2012
results on October 24, 2012. The Zacks Consensus Estimates for the
third quarter and full year 2012 are $1.77 and $7.10, respectively.
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. The company
operates through four segments: Information Systems &
Technology, Combat Systems, Marine Systems, and Aerospace.
The company mainly competes with
Northrop Grumman Corporation
Huntington Ingalls Industries Inc.