General Dynamics Corp.
) received a contract, worth $64.1 million, from the U.S. Navy for
the procurement of advance materials for the Mobile Landing
Platform (MLP) 4 Afloat Forward Staging Base (AFSB) program. The
work will be carried out primarily in Pennsylvania and
The order includes purchasing ship sets with specifications
supporting main diesel generator engines, integrated propulsion,
integrated bridge, propeller and shafting, and voice
communications. The contract will run through Mar 2017.
The MLP platform is a flexible semi-submersible modular ship
offering large-scale logistics movements including transfer of
vehicles and equipment from sea to shore. In the absence of port
availability, these ships provide support, thereby reducing the
Navy's reliance on foreign ports. The first delivery of the MLP
ship was made on May 2013.
The current sequestration cloud, which still hovers over the
defense sector, has hit hard on programs like the MLP and the
TAO(X) Oiler. Although the MLP ships will be retained by the
government in its proposed future defense budget, investments in
the project will likely be a low-key affair. The five-year plan
(FY2015-FY2019) could see the Navy purchasing only one MLP/AFSB
ship in 2017.
However, shrinking expenditures on these programs will have a
minimal impact on General Dynamics' future prospects. The growing
military tension in the Asia-Pacific region has provoked the
Department of Defense to prioritise the company's prime
shipbuilding programs in the proposed FY2015 Future Years Defense
For FY2015, the Navy plans to procure a total of seven ships, of
which two will be the Virginia-class attack submarines, three
Littoral Combat Ships and two Arleigh Burke-class destroyers. This
speaks of General Dynamics' constant focus on technological
innovation that enabled the company to secure big-value contracts
amidst the weak defense environment.
General Dynamics recently clinched a $2.8 billion order for
building four Arleigh Burke-class destroyers including an option
for a fifth. We believe the intermittent large contract wins will
keep the company poised for a stable growth in the near
Currently, General Dynamics carries a Zacks Rank#3 (Hold). Some
better-ranked defense stocks include
Leidos Holdings, Inc.
). While Embraer carries a Zacks Rank #1 (Strong Buy),
Curtiss-Wright Corp. and Leidos Holdings hold a Zacks Rank #2
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