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General Dynamic (GD) Wins Deal for Virginia-class Submarines

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General Dynamic Corporation (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract to support Virginia-class submarines. The deal has been awarded by the Naval Sea Systems Command, Washington, D.C.

Details of the Deal

Valued at $482.1 million, the contract is expected to conclude by October 2022. The latest modification has been made to provide lead yard support for Virginia-class submarines. It includes development studies and design efforts for the fleet of this nuclear-powered submarine.
 
Majority of the work related to this deal will be executed in Groton, CT.

What’s Favoring General Dynamics?

In recent times, the United States and other countries globally have increased their spending manifold for upgrading and betterment of defense systemsfueled by rising geopolitical tensions. Notably, missile submarines with undersea warfare capabilities form an integral part of any nation’s defense system. To this end, it is imperative to mention that General Dynamics remains one of the two defense contractors worldwide equipped to build stealth missile submarines.
 
In fact, Virginia-class submarine, co-designed by General Dynamics and Huntington Ingalls(HII - Free Report) , is one of the most advanced nuclear-powered multisession stealth submarines suitable for marine warfare. The submarine excels in littoral and open-ocean environments, and collects intelligence critical to the full spectrum of warfare. They are also capable of extended submerged operations with superior stealth, endurance, mobility and firepower.
 
Such enhanced features made the Virgin-class submarine an ideal choice for the U.S Navy.This provides General Dynamic an edge as it enjoys a dominant position as the manufacturer of nuclear-powered submarines. The latest contact win is a testament to that.
 
In a bid to expand and modernize its facilities to support increased rate of submarine construction, the company continues with its plan to invest $1.8 billion. Consequently, such huge investment will aid General Dynamics in meeting the solid demand that it enjoys for its submarines, which in turn will boost its top-line performance in the days ahead.
 
Evidently, General Dynamic Electric Boat aims to build two submarines each year for a period of five years. The company has 18 Virginia-class submarines in its backlog, which are scheduled for delivery in 2029, thereby reflecting solid revenue growth opportunities.

Looking Ahead

Submarines play a very vital role in any defense system and demand for more reliably equipped submarines is expected to grow in the days ahead as nations strengthen their naval power. Evidently, per a report from Research and Markets firm, the global submarine market is projected to witness a CAGR of 4% during the period of 2020-2024. Consequently, such strong growth trends highlight ample growth opportunities for General Dynamic as it enjoys a lucrative position in the submarine market.
 
Other submarine makers that are likely to benefit from such favorable trends are BAE Systems (BAESY - Free Report) and Mitsubishi Heavy Industries (MHVYF - Free Report) .
 
Notably, BAE System’s Astute class submarines are the U.K.’s largest and most powerful attack submarines and can strike at targets up to 1,000km from the coast with pin-point accuracy. On the other hand, Mitsubishi is well-known for its two submarines namely SETOSHIO and SORYU.