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General Dynamics (GD) Wins Contract to Support Submarines
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General Dynamics Corp.’s (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract to provide reactor plant planning yard support for nuclear-powered submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Per the terms of the deal, the company will also offer a support yard for the Navy's moored training ships. The contract is valued at $37.4 million. The majority of 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 for upgrading and improvising defense systems with technologically advanced features. To this end, military submarines and other defense ships with enhanced undersea warfare capabilities form integral parts of any nation’s defense system.
Therefore, the increased focus on military submarines is likely to benefit General Dynamics as its Electric Boat business unit is a prime contractor of submarines. The unit has established standards of excellence in the design, construction and lifecycle support of submarines for the U.S. Navy.
In this regard, the business is responsible for all aspects of design and engineering and leads the construction of Virginia-class attack submarines. General Dynamics plans to invest $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support growth in submarine construction.
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 multitude of gains from 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 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 pegged at 13.7.3%. The Zacks Consensus Estimate for BAE Systems’ 2022 earnings indicates year-over-year growth of 17%.
Northrop Grumman designs, develops and produces communication systems, sensors, signal processing and electronic warfare systems to counter 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 2.9%. NOC delivered an average earnings surprise of 0.15% in the last four quarters. Huntington Ingalls has an agreement with Electric Boat to build Virginia-class fast-attack nuclear submarines. Its division, 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 13.%. Huntington Ingalls delivered an average earnings surprise of 7.59% in the last four quarters.
Image: Bigstock
General Dynamics (GD) Wins Contract to Support Submarines
General Dynamics Corp.’s (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract to provide reactor plant planning yard support for nuclear-powered submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Per the terms of the deal, the company will also offer a support yard for the Navy's moored training ships. The contract is valued at $37.4 million. The majority of 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 for upgrading and improvising defense systems with technologically advanced features. To this end, military submarines and other defense ships with enhanced undersea warfare capabilities form integral parts of any nation’s defense system.
Therefore, the increased focus on military submarines is likely to benefit General Dynamics as its Electric Boat business unit is a prime contractor of submarines. The unit has established standards of excellence in the design, construction and lifecycle support of submarines for the U.S. Navy.
In this regard, the business is responsible for all aspects of design and engineering and leads the construction of Virginia-class attack submarines. General Dynamics plans to invest $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support growth in submarine construction.
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 multitude of gains from 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 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 pegged at 13.7.3%. The Zacks Consensus Estimate for BAE Systems’ 2022 earnings indicates year-over-year growth of 17%.
Northrop Grumman designs, develops and produces communication systems, sensors, signal processing and electronic warfare systems to counter 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 2.9%. NOC delivered an average earnings surprise of 0.15% in the last four quarters.
Huntington Ingalls has an agreement with Electric Boat to build Virginia-class fast-attack nuclear submarines. Its division, 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 13.%. 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 rallied 23.8% against the industry’s decline of 10.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research