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General Dynamics (GD) Wins $145M Deal to Aid Submarine Program
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General Dynamics Corp.’s (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract involving attack submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $145 million, the contract is expected to be completed by September 2024. Per the terms of the deal, General Dynamics will provide engineering, technical, design agent and planning yard support for operational strategic and attack submarines.
The majority of work related to this deal will be executed in Groton, CT.
What’s Favoring General Dynamics?
Changes in military dynamics have led to increasing defense spending as a well-funded military can deter sudden assault by other nations. This has led to increasing spending on submarines in order to improvise and upgrade sea warfare capabilities. Looking ahead, per a report from the Mordor Intelligence firm, the submarine market is projected to witness a CAGR of more than 4% during 2024-2029.
In this context, it is imperative to mention that General Dynamics’ Electric Boat unit is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. This unit has been building submarines since 1899 and is responsible for all aspects of design and engineering and leads the construction of both Virginia-class attack submarines and Columbia class ballistic-missile submarines.
Impressively, General Dynamics has been investing significant capital over the past several years in expanding and modernizing facilities at Electric Boat to support the growth in submarine construction. Currently, the company is working on Blocks IV and V in the Virginia-class submarine program, with 16 Virginia-class submarines in its backlog scheduled for delivery through 2032. Besides, construction of the Columbia class submarines is scheduled to continue for two decades and the value of the Navy’s program of record is in excess of $115 billion.
The aforementioned statistic is indicative of the solid demand that GD’s Electric Boat unit enjoys in the submarine market, which, in turn, has been enabling the company to win significant contracts like the latest one that should boost its revenue generation prospects. Considering the solid growth prospects of the global submarine market, as mentioned above, we may expect GD to continue to secure notable awards related to submarine construction and associated support provision.
Peer Moves
Defense majors that are likely to gain from the expanding submarine market are Huntington Ingalls Industries (HII - Free Report) , BAE Systems (BAESY - Free Report) and Northrop Grumman (NOC - Free Report) .
Huntington Ingalls’ Newport News (“NNS”) division is engaged in the construction, engineering, design, research and integrated planning of submarines. NNS has delivered 63 submarines to the U.S. Navy since 1960, comprised of 49 fast attack and 14 ballistic missile submarines. Of the 49 nuclear-powered fast attack submarines currently in two active service, 23 were delivered by NNS.
NNS is currently participating in the design and construction of the Columbia class (SSBN 826) submarines as a replacement for the current aging Ohio class nuclear ballistic missile submarines. The company is a co-developer with Electric Boat to build Virginia-class fast-attack nuclear submarines.
BAE Systems’ Astute class submarines are the largest and most advanced attack submarines ever built for the Royal Navy. Equipped with world-leading sensors, the Astute class carries both Tomahawk Land Attack Cruise Missiles and Spearfish heavyweight torpedoes.
In addition to Astute, BAE Systems is also constructing the Dreadnought class submarine, which will replace the Barrow-built Vanguard class submarines to maintain the United Kingdom’s continuous at sea deterrent.
BAE Systems has a long-term earnings growth rate of 14%. Shares of BAESY have returned 51.4% in the past year.
Northrop Grumman is the premier provider of missile launch systems for naval submarines. Its sensors are fielded on a Virginia-class submarine.
The company currently manufactures Launcher Subsystem hardware to support the Columbia class submarine and Dreadnought common missile compartment program.
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General Dynamics (GD) Wins $145M Deal to Aid Submarine Program
General Dynamics Corp.’s (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract involving attack submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $145 million, the contract is expected to be completed by September 2024. Per the terms of the deal, General Dynamics will provide engineering, technical, design agent and planning yard support for operational strategic and attack submarines.
The majority of work related to this deal will be executed in Groton, CT.
What’s Favoring General Dynamics?
Changes in military dynamics have led to increasing defense spending as a well-funded military can deter sudden assault by other nations. This has led to increasing spending on submarines in order to improvise and upgrade sea warfare capabilities. Looking ahead, per a report from the Mordor Intelligence firm, the submarine market is projected to witness a CAGR of more than 4% during 2024-2029.
In this context, it is imperative to mention that General Dynamics’ Electric Boat unit is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. This unit has been building submarines since 1899 and is responsible for all aspects of design and engineering and leads the construction of both Virginia-class attack submarines and Columbia class ballistic-missile submarines.
Impressively, General Dynamics has been investing significant capital over the past several years in expanding and modernizing facilities at Electric Boat to support the growth in submarine construction. Currently, the company is working on Blocks IV and V in the Virginia-class submarine program, with 16 Virginia-class submarines in its backlog scheduled for delivery through 2032. Besides, construction of the Columbia class submarines is scheduled to continue for two decades and the value of the Navy’s program of record is in excess of $115 billion.
The aforementioned statistic is indicative of the solid demand that GD’s Electric Boat unit enjoys in the submarine market, which, in turn, has been enabling the company to win significant contracts like the latest one that should boost its revenue generation prospects. Considering the solid growth prospects of the global submarine market, as mentioned above, we may expect GD to continue to secure notable awards related to submarine construction and associated support provision.
Peer Moves
Defense majors that are likely to gain from the expanding submarine market are Huntington Ingalls Industries (HII - Free Report) , BAE Systems (BAESY - Free Report) and Northrop Grumman (NOC - Free Report) .
Huntington Ingalls’ Newport News (“NNS”) division is engaged in the construction, engineering, design, research and integrated planning of submarines. NNS has delivered 63 submarines to the U.S. Navy since 1960, comprised of 49 fast attack and 14 ballistic missile submarines. Of the 49 nuclear-powered fast attack submarines currently in two active service, 23 were delivered by NNS.
NNS is currently participating in the design and construction of the Columbia class (SSBN 826) submarines as a replacement for the current aging Ohio class nuclear ballistic missile submarines. The company is a co-developer with Electric Boat to build Virginia-class fast-attack nuclear submarines.
BAE Systems’ Astute class submarines are the largest and most advanced attack submarines ever built for the Royal Navy. Equipped with world-leading sensors, the Astute class carries both Tomahawk Land Attack Cruise Missiles and Spearfish heavyweight torpedoes.
In addition to Astute, BAE Systems is also constructing the Dreadnought class submarine, which will replace the Barrow-built Vanguard class submarines to maintain the United Kingdom’s continuous at sea deterrent.
BAE Systems has a long-term earnings growth rate of 14%. Shares of BAESY have returned 51.4% in the past year.
Northrop Grumman is the premier provider of missile launch systems for naval submarines. Its sensors are fielded on a Virginia-class submarine.
The company currently manufactures Launcher Subsystem hardware to support the Columbia class submarine and Dreadnought common missile compartment program.