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General Dynamics (GD) Wins Submarine Repair Support Deal
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General Dynamics Corp.’s (GD - Free Report) business segment, Electric Boat, recently secured a modification contract for continued maintenance and repair support at Naval Submarine Base New London, CT. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Valued at $13.9 million, the contract is projected to be completed by June 2023. Work related to this deal will be executed in Groton, CT.
What’s Favoring General Dynamics?
The changing dynamics of the military landscape and the rising geopolitical tension make it mandatory for a country to continuously evolve and strengthen its defense structure. The increased defense spending is mainly due to upgrading and improvising defense systems with technologically advanced features. To this end, military submarines and other defense ships with enhanced undersea warfare capabilities form an integral part of any nation’s defense system.
Therefore, the increased focus on military submarines is likely to benefit General Dynamics with its Electric Boat business unit being the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. The unit has established standards of excellence in the design, construction and lifecycle support of submarines for the U.S. Navy. The latest contract win is a bright example of that.
Looking ahead, General Dynamics is investing $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support growth in submarine construction. It expects to substantially complete the investments by the end of 2023. Such investments are expected to enhance Electric Boat’s capability in submarine construction as well as provide lifecycle support for the same, which should enable it to win more contracts in the future.
Peer Moves
Nations are reinforcing their defense capabilities to deter any warfare-like situation. Per a report from Mordor Intelligence, the submarine market is projected to witness a CAGR of 4% between 2022 and 2031. This indicates ample growth opportunities for General Dynamics as it enjoys a lucrative position in the military submarine space.
A few defense primes that can reap the benefits of the expanding submarine market are BAE Systems (BAESY - Free Report) , Northrop Grumman (NOC - Free Report) and Huntington Ingalls Industries (HII - Free Report) .
BAE Systems’ Astute class submarines are the U.K.’s largest and most powerful attack submarines and can strike targets up to 621 miles from the coast with pinpoint accuracy.
The long-term earnings growth rate of BAESY is 13.2%. The Zacks Consensus Estimate for BAE Systems’ 2023 earnings indicates year-over-year growth of 32.1%.
Northrop Grumman designs, develops and produces communication systems, sensors, signal processing and electronic warfare systems to counter the increasingly sophisticated sea-based threats. Northrop Grumman also provides launch systems for submarines. Its eject launch technology has powered more than 7,000 successful launches.
Northrop Grumman has a long-term earnings growth rate of 3.5%. NOC delivered an average earnings surprise of 3.35% in the last four quarters.
Huntington Ingalls is another renowned submarine builder in the United States, with its division, Newport News being one of the only two U.S. shipyards capable of designing and building nuclear-powered submarines. Newport News is participating in the design and construction of the Columbia-class (SSBN 826) submarine as a replacement for the current aging Ohio-class nuclear ballistic missile submarines.
The Zacks Consensus Estimate for HII’s 2022 earnings indicates year-over-year growth of 8.8%. Huntington Ingalls delivered an average earnings surprise of 7.59% in the last four quarters.
Image: Bigstock
General Dynamics (GD) Wins Submarine Repair Support Deal
General Dynamics Corp.’s (GD - Free Report) business segment, Electric Boat, recently secured a modification contract for continued maintenance and repair support at Naval Submarine Base New London, CT. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Valued at $13.9 million, the contract is projected to be completed by June 2023. Work related to this deal will be executed in Groton, CT.
What’s Favoring General Dynamics?
The changing dynamics of the military landscape and the rising geopolitical tension make it mandatory for a country to continuously evolve and strengthen its defense structure. The increased defense spending is mainly due to upgrading and improvising defense systems with technologically advanced features. To this end, military submarines and other defense ships with enhanced undersea warfare capabilities form an integral part of any nation’s defense system.
Therefore, the increased focus on military submarines is likely to benefit General Dynamics with its Electric Boat business unit being the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. The unit has established standards of excellence in the design, construction and lifecycle support of submarines for the U.S. Navy. The latest contract win is a bright example of that.
Looking ahead, General Dynamics is investing $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support growth in submarine construction. It expects to substantially complete the investments by the end of 2023. Such investments are expected to enhance Electric Boat’s capability in submarine construction as well as provide lifecycle support for the same, which should enable it to win more contracts in the future.
Peer Moves
Nations are reinforcing their defense capabilities to deter any warfare-like situation. Per a report from Mordor Intelligence, the submarine market is projected to witness a CAGR of 4% between 2022 and 2031. This indicates ample growth opportunities for General Dynamics as it enjoys a lucrative position in the military submarine space.
A few defense primes that can reap the benefits of the expanding submarine market are BAE Systems (BAESY - Free Report) , Northrop Grumman (NOC - Free Report) and Huntington Ingalls Industries (HII - Free Report) .
BAE Systems’ Astute class submarines are the U.K.’s largest and most powerful attack submarines and can strike targets up to 621 miles from the coast with pinpoint accuracy.
The long-term earnings growth rate of BAESY is 13.2%. The Zacks Consensus Estimate for BAE Systems’ 2023 earnings indicates year-over-year growth of 32.1%.
Northrop Grumman designs, develops and produces communication systems, sensors, signal processing and electronic warfare systems to counter the increasingly sophisticated sea-based threats. Northrop Grumman also provides launch systems for submarines. Its eject launch technology has powered more than 7,000 successful launches.
Northrop Grumman has a long-term earnings growth rate of 3.5%. NOC delivered an average earnings surprise of 3.35% in the last four quarters.
Huntington Ingalls is another renowned submarine builder in the United States, with its division, Newport News being one of the only two U.S. shipyards capable of designing and building nuclear-powered submarines. Newport News is participating in the design and construction of the Columbia-class (SSBN 826) submarine as a replacement for the current aging Ohio-class nuclear ballistic missile submarines.
The Zacks Consensus Estimate for HII’s 2022 earnings indicates year-over-year growth of 8.8%. Huntington Ingalls delivered an average earnings surprise of 7.59% in the last four quarters.
Zacks Rank & Price Performance
Currently, General Dynamics carries a Zacks Rank #3 (Hold). In the past year, shares of GD have gained 7% against the industry’s decline of 8.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research