Electric Boat, a wholly owned subsidiary of General Dynamics Corporation (GD), has received a $23 million work order from the U.S. Navy to support submarine repair work at Norfolk Naval Shipyard in Virginia.
Under this work order, approximately 880 Electric Boat trades employees will be responsible for maintenance activities on USS Newport News and USS West Virginia. Additionally, more than 4,100 employees of Electric Boat's operations and support organization in Groton will work with their proven skills and capabilities in final assembly, test and life-cycle support.
The work order, which is a part of the Basic Ordering Agreement (“BOA”), was awarded to the General Dynamic affiliate in 2010 by the U.S. Navy to support submarine repair work. It is scheduled for completion in September 2012.
Recently, Electric Boat received two modification contracts from the U.S. Navy having a combined worth of $32.9 million. Per the first modification contract, Electric Boat will procure, manufacture and test prototype material and equipment to be used in the production of the Common Missile Compartment for the United Kingdom's Successor ballistic-missile submarine and the U.S. Ohio replacement submarine.
This new $21 million contract modifies the $76 million contract awarded in 2008 and has a potential value of $692 million if all options are exercised. Under the second contract modification, valued at $11.9 million, Electric Boat will support submarine repair work at Portsmouth Naval Shipyard inKittery, Maine. This work is also a part of Basic Ordering Agreement awarded to Electric Boat in September 2010.
General Dynamics’ revenue exposure is spread over a broad portfolio of products and services that will keep the overall growth momentum steady. Looking forward, key drivers include the reviving fortunes for the 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 high. Also, we have turned slightly cautious about the company’s steadily dropping order backlog, as well as the recent G650 crash and risks related to the execution of key projects. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
General Dynamics is expected to release its third quarter results on October 26, 2011. The Zacks Consensus Estimates for third quarter 2011 and fiscal year 2011 are currently at $1.77 per share and $7.19 per share, respectively.
Headquartered 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 (IS&T), Combat Systems, Marine Systems, and Aerospace. Some of its main competitors are The Boeing Company (BA) and Lockheed Martin Corporation (LMT).
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment