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General Dynamics (GD) Wins $46M Submarine Maintenance Deal

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General Dynamics Corporation’s (GD - Free Report) business division, Electric Boat, recently secured a $46.2-million modification contract for providing non-nuclear repair services to support submarine maintenance. The contract was awarded by the Supervisor of Shipbuilding, Groton, CT.

Details of the Deal

Per the contract, General Dynamics will offer non-nuclear repair services required to support submarine overhauls, maintenance, repair and modernization upgrades; ship alterations, temporary modifications and field changes; supplies or ancillary services along with corrective and preventative maintenance.

Work related to the deal will be performed in New London, Connecticut and is expected to get completed by December 2019.

What Favors General Dynamics?

General Dynamics enjoys a dominant position as a Navy contractor, with the company being one of the only two contractors in the world equipped to build nuclear-powered submarines. Moreover, the United States is strategically strengthening its naval power by upgrading missile submarines due to the rising widespread geo-political tensions across the world.

Inevitably, the demand for its technical expertise and wide variety of services it provides for the proper functioning of submarines also remains high. Such solid demand for submarines and their associate services backed by frequent contract wins hugely benefit defense contractors like General Dynamics.

Per Market Research Future firm, the global submarine market is expected to see a 4.24% CAGR from 2018 to 2023. As submarines remain a vital part of the U.S. navy fleets imperative in combat, surveillance, counter-surveillance, and other missions, General Dynamics will certainly benefit from such developments being one of the world's major submarine manufacturers.

Price Movement

General Dynamics’ stock has lost 13.3% in the past year, against the industry’s growth of 3.7%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space.

Zacks Rank & Key Picks

General Dynamics currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are Aerojet Rocketdyne Holdings . Raytheon Company and The Boeing Company (BA - Free Report) .

While Aerojet Rocketdyne sports a Zacks Rank #1 (Strong Buy), Raytheon and Boeing carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Raytheon delivered average positive earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 1.7% to $10.10 cents in the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 3% to $15.05 in the past 90 days.

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