General Dynamics Corporation’s( GD Quick Quote GD - Free Report) business unit, Mission Systems, recently clinched an $11.4-million modification contract involving Knifefish unmanned undersea vehicle (UUV).
Per the deal, GD will provide services for the Knifefish Block 0 to Block 1 retrofit performance. Majority of work related to the deal will be performed in Quincy, MA.
The contract, which is expected to be completed by June, 2024, has been awarded by the Naval Sea Systems Command, Washington, D.C.
Significance of Knifefish UUV
Knifefish is a medium-class Mine UUV designed for deployment off the Littoral Combat Ship. The Knifefish UUV provides the mine warfare commander with enhanced mine-hunting capability by detecting, classifying and identifying buried mines and mines in high clutter environments.
Knifefish gathers environmental data to provide intelligence support for other mine warfare systems. Such remarkable features that encourage intelligence support for mine warfare systems may have led to multiple order wins for GD involving the Knifefish, like the latest one. Such contract wins should boost General Dynamics’ revenue generation prospects from the UUV business arena.
What’s Favoring General Dynamics?
Military spending witnessed a stark increase in the past few years to modernize and upgrade nations’ defense system, across the globe, to meet the current warfare requirements. In such a scenario, the demand for mine countermeasures system for the littoral combat ship also increased manifold.
Per the reports from Markets and Markets, the UUV market is anticipated to witness a CAGR of 16% from 2022-2027 period. General Dynamics stands to benefit from the solid growth prospects that the UUV market is offering, with the company being the prime contractor of the Knifefish UUV that offers advance mission-critical solutions for the navy.
Another defense stock that is likely to benefit from the expanding UUV market is:
Boeing( BA Quick Quote BA - Free Report) : Its Echo Voyager is a fully autonomous extra-large unmanned undersea vehicle (XLUUV) class UUV that can be used for a variety of missions that were previously impossible due to traditional UUV limitations. Echo Voyager is complete with an extensive internal and external payload volume and available energy capacity, expanding the parameters of what is possible in current unmanned undersea systems.
The long-term earnings growth rate of Boeing is pegged at 4%. BA’s shares have surged 58.9% in the past year.
In the past month, shares of General Dynamics have increased 1.4% compared with the
industry’s growth of 1.5%. Zacks Rank & Stocks to Consider
General Dynamics currently carries a Zacks Rank #3 (Hold). Two better-ranked stock in the same industry are
Spire ( SPIR Quick Quote SPIR - Free Report) and Safran ( SAFRY Quick Quote SAFRY - Free Report) , carrying a Zacks Rank #2 (Buy). You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Spire has a long-term earnings growth rate of 7.9%. The Zacks Consensus Estimate for Spire’s 2023 sales suggests a growth rate of 32.9% from the prior-year reported figure.
The Zacks Consensus Estimate for Spire’s 2024 sales calls for a growth rate of 34.3% from the prior-year estimated figure.
Safran boast a long-term earnings growth rate of 37.6%. The Zacks Consensus Estimate for its 2023 sales implies a growth rate of 36.7% from the prior-year reported figure.
The Zacks Consensus Estimate for SAFRY’s 2024 sales calls for a growth rate of 9.9% from the prior-year estimated figure.