General Dynamics (GD) Unit Wins $644M U.S. Navy Contract
General Dynamics Corporation’s GD business unit, Bath Iron Works (“BIW”), has won a contract from the U.S. Navy to design and build an Arleigh Burke-class destroyer for fiscal 2016, Harvey C. Barnum Jr. The contract is worth $644.3 million.
The aforesaid deal is part of a multi-year contract for DDG 51 Arleigh Burke-class destroyers jointly awarded to General Dynamics and Huntington Ingalls Industries Inc. HII in Jun 2013. Notably, General Dynamics and Huntington Ingalls are the only two companies that build this type of destroyers for the U.S. Navy's current fleet. The total value of the contract for five ships, one to be constructed every year from fiscal 2013 to fiscal 2017, is roughly $3.4 billion. Of this, General Dynamics won contract worth $2.8 billion, while the rest was allocated for Huntington Ingalls.
The Harvey C. Barnum Jr. or DDG 124 is the first destroyer in the fleet. The ship has been built using a Flight III design comprising the upgraded Air and Missile Defense Radar built by Raytheon Company RTN. The construction will commence in Sep 2017 and delivery of the destroyer has been is scheduled for Jul 2021.
The other four destroyers that are under construction at BIW are Rafael Peralta (DDG 115), Thomas Hudner (DDG 116), Daniel Inouye (DDG 118) and Carl M. Levin (DDG 120). Of these, a contract worth $642.5 million to build the DDG 120 destroyer was won by the company in Mar 2014.
The highly competent, multi-mission ships − Arleigh Burke-class destroyers – are capable of performing various operations ranging from peacetime presence and crisis management to sea control and power projection. In support of the country’s military stratagem, DDGs can engage in simultaneous air, surface and subsurface strikes. The ship boasts numerous offensive and defensive weapons designed to support maritime defense needs in the 21st century.
We note that General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company’s revenues are derived from a broad portfolio of products and services that help to keep overall growth momentum steady.
Over the years, General Dynamics has maintained a longstanding strategic alliance with the U.S. defense department and tries to meet its commitments in terms of maintaining product and service standards along with delivery timing.
Zacks Rank and Stock to Consider
General Dynamics currently has a Zacks Rank #3 (Hold). A better-ranked stock in the aerospace and defense equipment industry is HEICO Corporation HEI, which sports a Zacks Rank #1 (Strong Buy).
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