General Dynamics Corp. (GD) Wins Contracts worth $605M - Analyst Blog

General Dynamics Corp. (GD) won several contracts worth a total of about $605 million from the U.S. Department of Defense (“DoD”) on Dec 19, 2014.

The largest of the contracts is worth $498.1 million. It is a fixed-price-incentive, firm-target modification contract. Per the contract, General Dynamics will construct the fourth Mobile Landing Platform Afloat Forward Staging Base for the U.S. DoD.

The contract work will be done by General Dynamics National Steel and Shipbuilding Co. (“NASSCO”), a unit of General Dynamics, and is expected to be over by Mar 2018. The contracting activity is the Naval Sea Systems Command, WA, District of Columbia.

NASSCO also received a modification contract worth $7.3 million for the decommissioning of USS Peleliu (LHA 5). The USS Peleliu (LHA 5) has been in service for 35 years and will be decommissioned in fiscal 2015. The contracting activity is the Southwest Regional Maintenance Center, San Diego, CA and the contract work is expected to be over by Mar 2015.

General Dynamics, the maker of the Gulfstream jets, tanks and U.S. Navy ships, is also one of the only two contractors equipped to build nuclear-powered submarines in the U.S., the other being Huntington Ingalls Industries Inc. (HII). This ensures a regular flow of big contracts toward the company.

Apart from this, General Dynamics Land Systems, a unit of General Dynamics,has won a $99.7 million firm-fixed-price foreign military sales contract for the conversion of 42 units of M1A2s into a M1A2S configuration for Saudi Arabia. The work is expected to be over by Jul 31, 2016.

General Dynamics has been one of the highest earners since the beginning of 2014. Its share price has surged about 43.8% till Dec 19, 2014, buoyed by a consistent flow of contracts and effective cost-cutting initiatives. The company has been consistently beating earnings estimates for the last four quarters, delivering a surprise of 4.91% on an average.

General Dynamics currently holds a Zacks Rank #2 (Buy). Equally well-ranked stocks in the same sector include The Boeing Co. (BA) and Engility Holdings, Inc. (EGL).
 

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