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General Dynamics Unit Wins $9M Deal for Support Services
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Defense behemoth General Dynamics Corp.’s (GD - Free Report) business division, Electric Boat Corp., secured a contract worth $9.3 million from the U.S. Navy to provide support services for Virginia-class program.
Details of the Deal
Per the agreement, Electric Boat will support fiscal 2017 critical path procurement through acquisition of partial material for Virginia Payload Module tube installation.
Work related to this deal is scheduled to be completed by Apr 2018 and will be executed in Groton, CN. The company will utilize fiscal 2017 shipbuilding and conversion (Navy) funds.
A Brief Note on Virginia-Class Submarines
The Virginia-class program comprises nuclear-powered fast-attack submarines serving the Navy. These Virginia-class submarines are designed for a broad spectrum of open-ocean and littoral missions. Also, they are used for intelligence, surveillance and reconnaissance (ISR) operations as well as mine warfare.
Current Scenario
Attack submarines are designed to seek and destroy enemy submarines as well as surface ships. Currently, the Navy has three classes of nuclear-powered attack submarines, Virginia-class, Ohio-class and Los Angeles-class. These submarines are expected to be operational through 2070.
Our Take
General Dynamics is one of the two contractors in the world that is equipped to build nuclear-powered submarines. The company enjoys a dominant position as a Navy contractor and continues to be a prime contractor for the development of Virginia-class submarines, with Huntington Ingalls Industries Inc. (HII - Free Report) acting as the subcontractor.
Moreover, the fiscal year 2017 spending bill approved by Obama government includes $582.7 billion in funding for the Pentagon, which comprise $71.4 billion for R&D and $8.1 billion for submarines (with over $40 billion in the next five years). We believe this will definitely drive growth at General Dynamics’ nuclear submarines division, going forward.
Notably, General Dynamics’ revenue exposure is spread over a broad portfolio of products and services that will keep its overall growth momentum steady. Evidently, Electric Boat is a unit of Marine Systems, which is a leading U.S. shipbuilder, designing, building and supporting a diverse portfolio of ships for the Navy and commercial customers. In partnership with the Navy, this business division has been successfully pursuing its goal to reduce ship costs while focusing on improving overall efficiency.
Price Movement
Shares of General Dynamics have rallied 41.7% in the last one year, outperforming the Zacks categorized Aerospace-Defense industry’s gain of 26.5%. This could be because General Dynamics consistently maintains a strategic alliance with the U.S. Department of Defense, which allows it to enjoy a steady flow of contracts. Consistent deal wins also allow its peers like Lockheed Martin Corp. (LMT - Free Report) and Northrop Grumman Corp. (NOC - Free Report) keep up their industry-leading performance.
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Image: Bigstock
General Dynamics Unit Wins $9M Deal for Support Services
Defense behemoth General Dynamics Corp.’s (GD - Free Report) business division, Electric Boat Corp., secured a contract worth $9.3 million from the U.S. Navy to provide support services for Virginia-class program.
Details of the Deal
Per the agreement, Electric Boat will support fiscal 2017 critical path procurement through acquisition of partial material for Virginia Payload Module tube installation.
Work related to this deal is scheduled to be completed by Apr 2018 and will be executed in Groton, CN. The company will utilize fiscal 2017 shipbuilding and conversion (Navy) funds.
A Brief Note on Virginia-Class Submarines
The Virginia-class program comprises nuclear-powered fast-attack submarines serving the Navy. These Virginia-class submarines are designed for a broad spectrum of open-ocean and littoral missions. Also, they are used for intelligence, surveillance and reconnaissance (ISR) operations as well as mine warfare.
Current Scenario
Attack submarines are designed to seek and destroy enemy submarines as well as surface ships. Currently, the Navy has three classes of nuclear-powered attack submarines, Virginia-class, Ohio-class and Los Angeles-class. These submarines are expected to be operational through 2070.
Our Take
General Dynamics is one of the two contractors in the world that is equipped to build nuclear-powered submarines. The company enjoys a dominant position as a Navy contractor and continues to be a prime contractor for the development of Virginia-class submarines, with Huntington Ingalls Industries Inc. (HII - Free Report) acting as the subcontractor.
Moreover, the fiscal year 2017 spending bill approved by Obama government includes $582.7 billion in funding for the Pentagon, which comprise $71.4 billion for R&D and $8.1 billion for submarines (with over $40 billion in the next five years). We believe this will definitely drive growth at General Dynamics’ nuclear submarines division, going forward.
Notably, General Dynamics’ revenue exposure is spread over a broad portfolio of products and services that will keep its overall growth momentum steady. Evidently, Electric Boat is a unit of Marine Systems, which is a leading U.S. shipbuilder, designing, building and supporting a diverse portfolio of ships for the Navy and commercial customers. In partnership with the Navy, this business division has been successfully pursuing its goal to reduce ship costs while focusing on improving overall efficiency.
Price Movement
Shares of General Dynamics have rallied 41.7% in the last one year, outperforming the Zacks categorized Aerospace-Defense industry’s gain of 26.5%. This could be because General Dynamics consistently maintains a strategic alliance with the U.S. Department of Defense, which allows it to enjoy a steady flow of contracts. Consistent deal wins also allow its peers like Lockheed Martin Corp. (LMT - Free Report) and Northrop Grumman Corp. (NOC - Free Report) keep up their industry-leading performance.
Zacks Rank
General Dynamics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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