General Dynamics Wins Navy Contract - Analyst Blog

General Dynamics Corporation’s (GD) wholly owned subsidiary General Dynamics Electric Boat has won a $23.7 million contract modification from the U.S. Navy to prepare for the post-shakedown availability (PSA) on the nuclear submarine New Hampshire (SSN-778).

Work on the contract is expected to begin in February 2010. General Dynamics estimates up to 800 employees to be engaged in the project, which is scheduled for completion in September 2010.
 
New Hampshire, the fifth ship of the Virginia Class, was delivered to the Navy in August 2008. Electric Boat and its construction teammate, Northrop Grumman Corporation (NOC), have received contracts to produce a total of 18 Virginia-class submarines. A total of 30 ships have been planned.
 
General Dynamics’ total backlog was $65.5 billion at the end of fiscal 2009, reflecting an increase mainly in both Aerospace and Combat Systems segments.
 
General Dynamics, headquartered in Falls Church, Virginia, is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. The company operates through four business segments − Information Systems & Technology, Combat Systems, Marine Systems, and Aerospace. Its major competitors are Lockheed Martin Corporation (LMT), Raytheon Company (RTN) and Force Protection Inc. (FRPT).
 
General Dynamics is a well-run company that is likely to continue to deliver on expectations driven by a strong revenue growth, margin expansion and cash flow generation. Strong defense outlays should further improve the company’s outlook for shareholders while an increasing funded backlog and an improving balance sheet are additional positive factors. The Zacks Consensus Estimate on the company’s earnings for the first quarter is currently pegged at $1.59 per share, and has been stable for some time.

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