General Dynamics Corp.’s (NYSE:GD) subsidiary, Electric Boat Corp., secured a contract worth $300.6 million for Virginia Class submarines.
The contract mandated Electric Boat to provide Lead Yard Services and development studies and design efforts for the said submarines. This General Dynamics affiliate will also maintain, update, and support the Virginia Class design and related drawings and data for each submarine, including technology insertion throughout its construction and Post Shakedown Availability (PSA) period.
The work will be carried out mainly at the Groton shipyard in Connecticut and is expected to be completed by Sep 2017.
About Virginia-Class Submarine
The Virginia-class submarine program is a class of nuclear-powered fast attack submarines serving the U.S. Navy. These submarines are designed for a broad spectrum of open-ocean and littoral missions. Virginia-class submarines are also designed for intelligence, surveillance and reconnaissance operations as well as mine warfare. These vessels are one of the three classes of attack submarines used by the U.S. Navy, the other two being the Los Angeles class and the Seawolf class. The submarines will be operational until 2070.
A Look into General Dynamics’ Second-Quarter Performance
We remind investors that General Dynamics’ second-quarter earnings not only beat the Zacks Consensus Estimate by 6.1% but also improved 7.5% year over year. The upside was largely driven by favorable margins in three of the four segments along with a lower tax rate. Based on the robust performance in the first half of 2016, the company raised its earnings per share guidance for the year.
However, the top line lagged estimates and also declined 2.8% from the year-ago level. It also registered weak bookings during the quarter. The large cabin business jet market is another concern.
General Dynamics currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other favorably placed stocks in the aerospace and defense space are Engility Holdings, Inc. (NYSE:EGL) , AeroVironment, Inc. (NASDAQ:AVAV) and Ducommun Inc. (NYSE:DCO) , all sporting a Zacks Rank #1 (Strong Buy).
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