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General Dynamics (GD) Wins $133.2M Deal for MK80 Series Bombs

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General Dynamics Corporation’s (GD - Free Report) business unit, Ordinance and Tactical Systems (“OTS”), recently clinched a contract to provide MK80 series general-purpose (“GP”) tritonal bomb components. The deal has been awarded by the U.S. Army Contracting Command, Rock Island, IL.

Valued at $133.2 million, the contract is expected to concludeby Dec 31, 2023.  

Significance of MK80 Series Tritonal Bomb

A GP bomb is an air-dropped bomb intended as a compromise between blast damage and penetration and fragmentation in an explosive effect. It is designed to be effective against enemy troops, vehicles and buildings. General Dynamics’ OTS unit designs, develops and produces a comprehensive array of GP bombs. The primary U.S. GP bombs are GD’s Mark 80 series, which includes four basic weapon types – Mark 81, Mark 82, Mark 83 and Mark 84.

General Dynamics, the prime contractor of such remarkably efficient and effective bombs, is likely to continue to witness a strong order inflow from the Pentagon. The latest contract win is a bright example of that.

Growth Prospects

Nations have increased their defense spending on military equipment and various arsenals to strengthen their defense capabilities. The surge in the demand for defense products is primarily due to rising geopolitical tensions and amplified terrorist threats. Hence, military bombs, an integral part of any defense system, have also registered strong growth in demand.

In this context, per the report from Mordor Intelligence, the global ammunition market is projected to witness a CAGR of 3.5% during the 2022-2031 period. Such abounding growth trends indicate ample growth opportunities for General Dynamics as it enjoys a lucrative position in the ammunitions manufacturing market.

A few defenseprimes that can reap the benefits of the aforementioned marketare BAE Systems (BAESY - Free Report) , Northrop Grumman (NOC - Free Report) and Lockheed Martin (LMT - Free Report) .

BAE Systems’ small arms ammunition manufacturing facility at Radway Green has the most-advanced ammunition production capabilities in the world. BAE Systems can produce more than one million rounds per day of small arms ammunition in 5.56mm and 7.62mm NATO calibers, including ball, tracer and blank natures.

The long-term earnings growth rate of BAESY is pegged at 7.2%. Shares of BAE Systems have rallied 30% in the past year.

Northrop Grumman specializes in innovating low-cost, highly reliable and precise weapons and ammunition for artillery and mortar systems, medium-caliber weapon platforms, battle tanks and individual soldiers. The company is the world’s top producer of medium-caliber ammunition and gun systems and produces a complete family of large-caliber tactical and target practice ammunition.

Northrop Grumman’s long-term earnings growth rate is pegged at 6.1%. Shares of NOC have returned 26.8% value to investors in the past year.

Lockheed Martin is a leader in providing vertical launching systems and munitions for the Navy, with products, such as the MK 41, the Single Cell Launcher, the Extensible Launching System and the Vertical Launch Anti-Submarine Rocket.

Lockheed Martin’s long-term earnings growth rate is pegged at 5.7%. Shares of LMT have returned 14.6% value to investors in the past year.

Price Performance

Shares of General Dynamics have rallied 20.6% in the past year against the industry’s decline of 39.1%.

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Zacks Rank

General Dynamics currently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.