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General Dynamics (GD) Wins Deal to Aid CVN-77 Naval Ship
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General Dynamics Corp.’s (GD - Free Report) NASSCO business unit, recently clinched a modification contract for the planned incremental availability of the USS George H.W. Bush (CVN-77) aircraft carrier. The award has been provided by the Mid Atlantic Regional Maintenance Center, Norfolk, VA.
Valued at $27 million, this contract is projected to be completed by July 2024. Work related to this contract will be carried out in Norfolk, VA.
What’s Favoring General Dynamics
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities.
Such increased spending tends to benefit General Dynamics, which is one of the two major naval shipbuilders in the United States. The company’s NASSCO unit specializes in Navy auxiliary and support ships. It is currently building the Expeditionary Sea Base (ESB), which serves as an afloat forward-staging base for U.S. Marines and special operations forces, and the John Lewis-class (T-AO-205) fleet replenishment oiler.
Impressively, NASSCO conducts full-service maintenance and surface-ship repair operations in Navy fleet concentration areas in San Diego, CA; Norfolk, VA; Mayport, FL; and Bremerton, WA.
These capabilities of NASSCO allow it to win notable Navy contracts like the latest one. Such contract wins should continue to boost the company’s order book in the long run. This is likely to enhance GD’s revenue generation prospects.
Growth Prospects & Peer Moves
As demand for an efficient security system that can strengthen naval sea warfare capabilities rises, so does the prospect of the naval ship market. Looking ahead, per a report from Mordor Intelligence firm, the naval vessels market is projected to witness a CAGR of 13.3% during the 2023-2028 period. This market growth opportunity should boost General Dynamics’ operating results as it is one of the prime contractors of navy ships.
Other defense majors poised to benefit from the expanding naval vessels market are BAE Systems (BAESY - Free Report) , Lockheed Martin (LMT - Free Report) and Huntington Ingalls Industries (HII - Free Report) .
BAE Systems designs, builds, commissions, repairs and supports a full range of complex naval ships, from offshore patrol vessels to aircraft carriers. This gives customers the capability to carry out extensive naval operations. Its Queen Elizabeth Class Aircraft Carriers are the largest warships ever constructed in the United Kingdom.
BAESY boasts a long-term earnings growth rate of 13.6%. The Zacks Consensus Estimate for BAE Systems’ 2023 sales indicates growth of 33.6% from the 2022 level.
Lockheed manufactures Littoral Combat Ships (LCS). Its freedom-variant LCS USS Nantucket (LCS 27) is a resilient, flexible warship designed to encounter the evolving missions of the U.S. Navy. LCS 27 is particularly designed to conduct close-to-shore missions.
Lockheed’s long-term earnings growth rate is 8.6%. The Zacks Consensus Estimate of LMT’s 2023 sales implies growth of 0.9% from the prior-year figure.
Huntington Ingalls’ business segment designs and constructs non-nuclear ships for the U.S. Navy and the U.S. Coast Guard, including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters.
The company’s long-term earnings growth rate is 8%. The Zacks Consensus Estimate of HII’s 2023 sales implies growth of 3.9% from that recorded a year ago.
Price Performance
Shares of General Dynamics have rallied 11.8% in the past three months against the industry’s 0.6% decline.
Image: Bigstock
General Dynamics (GD) Wins Deal to Aid CVN-77 Naval Ship
General Dynamics Corp.’s (GD - Free Report) NASSCO business unit, recently clinched a modification contract for the planned incremental availability of the USS George H.W. Bush (CVN-77) aircraft carrier. The award has been provided by the Mid Atlantic Regional Maintenance Center, Norfolk, VA.
Valued at $27 million, this contract is projected to be completed by July 2024. Work related to this contract will be carried out in Norfolk, VA.
What’s Favoring General Dynamics
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities.
Such increased spending tends to benefit General Dynamics, which is one of the two major naval shipbuilders in the United States. The company’s NASSCO unit specializes in Navy auxiliary and support ships. It is currently building the Expeditionary Sea Base (ESB), which serves as an afloat forward-staging base for U.S. Marines and special operations forces, and the John Lewis-class (T-AO-205) fleet replenishment oiler.
Impressively, NASSCO conducts full-service maintenance and surface-ship repair operations in Navy fleet concentration areas in San Diego, CA; Norfolk, VA; Mayport, FL; and Bremerton, WA.
These capabilities of NASSCO allow it to win notable Navy contracts like the latest one. Such contract wins should continue to boost the company’s order book in the long run. This is likely to enhance GD’s revenue generation prospects.
Growth Prospects & Peer Moves
As demand for an efficient security system that can strengthen naval sea warfare capabilities rises, so does the prospect of the naval ship market. Looking ahead, per a report from Mordor Intelligence firm, the naval vessels market is projected to witness a CAGR of 13.3% during the 2023-2028 period. This market growth opportunity should boost General Dynamics’ operating results as it is one of the prime contractors of navy ships.
Other defense majors poised to benefit from the expanding naval vessels market are BAE Systems (BAESY - Free Report) , Lockheed Martin (LMT - Free Report) and Huntington Ingalls Industries (HII - Free Report) .
BAE Systems designs, builds, commissions, repairs and supports a full range of complex naval ships, from offshore patrol vessels to aircraft carriers. This gives customers the capability to carry out extensive naval operations. Its Queen Elizabeth Class Aircraft Carriers are the largest warships ever constructed in the United Kingdom.
BAESY boasts a long-term earnings growth rate of 13.6%. The Zacks Consensus Estimate for BAE Systems’ 2023 sales indicates growth of 33.6% from the 2022 level.
Lockheed manufactures Littoral Combat Ships (LCS). Its freedom-variant LCS USS Nantucket (LCS 27) is a resilient, flexible warship designed to encounter the evolving missions of the U.S. Navy. LCS 27 is particularly designed to conduct close-to-shore missions.
Lockheed’s long-term earnings growth rate is 8.6%. The Zacks Consensus Estimate of LMT’s 2023 sales implies growth of 0.9% from the prior-year figure.
Huntington Ingalls’ business segment designs and constructs non-nuclear ships for the U.S. Navy and the U.S. Coast Guard, including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters.
The company’s long-term earnings growth rate is 8%. The Zacks Consensus Estimate of HII’s 2023 sales implies growth of 3.9% from that recorded a year ago.
Price Performance
Shares of General Dynamics have rallied 11.8% in the past three months against the industry’s 0.6% decline.
Image Source: Zacks Investment Research
Zacks Rank
General Dynamics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.