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General Dynamics' Arm Wins a $987M Navy Deal for Submarine Support
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Key Takeaways
GD's Electric Boat unit landed a $986.8M contract for Columbia-class submarine support through 2031.
The deal includes component development and supplier support for nuclear shipbuilding.
Most of the contract work will be carried out at the Groton, CT, facility.
General Dynamics Corporation’s (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract involving the Columbia Class submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of GD’s Deal
Valued at $986.8 million, the contract is expected to be completed by December 2031. Per the terms of the modification contract, the company will provide additional component development, class lead yard support and Submarine Industrial Base (SIB) supplier development enhancements supporting Columbia-class ballistic missile submarines and the nuclear shipbuilding enterprise.
The majority of the work under this contract will be executed in Groton, CT.
GD’s Growth Prospects
Rising military conflicts, terrorism and border disputes have driven nations across the globe to focus more on national security, with investments in enhancing their submarine fleet. This surge is fuelled by the increasing demand for advanced technologies like stealth capabilities, underwater surveillance and long-range strike systems, as well as the growing complexity of modern naval warfare.
This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 7.6% for the global submarine market during the 2025-2030 time period.
This is likely to benefit General Dynamics, a prominent contractor in the submarine market. Its Electric boat business division is responsible for all aspects of design and engineering and leads the construction of Columbia-class ballistic missiles and Virginia-class attack submarines.
Opportunities for Other Defense Players
Other defense companies that are likely to enjoy the perks of the expanding global submarine market have been discussed below.
Huntington Ingalls Industries (HII - Free Report) : Through its Newport News Shipbuilding division, HII is involved in producing the Columbia-class and Virginia-class submarines, two key assets of the U.S. Navy. The company also provides fleet services to its submarines around the world, offering modernization, repair and installation services.
Huntington has a long-term (three to five years) earnings growth rate of 11%. The Zacks Consensus Estimate for HII’s 2025 sales indicates year-over-year growth of 3.3%.
BAE Systems (BAESY - Free Report) : It plays a vital role in the production of advanced submarines, particularly in the United Kingdom’s defense sector. BAE Systems is the primary manufacturer of the Astute-class nuclear submarines, which are integral to the Royal Navy's fleet.
BAE Systems has a long-term earnings growth rate of 13.4%. The Zacks Consensus Estimate for BAESY’s 2025 sales indicates year-over-year growth of 62.6%. Northrop Grumman Corporation (NOC - Free Report) : It is a renowned provider of missile launch systems for naval submarines. The company manufactures Launcher Subsystem hardware to support the Columbia and Dreadnought common missile compartment program.
Northrop has a long-term earnings growth rate of 3.3%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 2.8%.
GD Stock’s Price Movement
Shares of GD have lost 1.1% in the past month against the industry’s 1.1% growth.
Image: Bigstock
General Dynamics' Arm Wins a $987M Navy Deal for Submarine Support
Key Takeaways
General Dynamics Corporation’s (GD - Free Report) business unit, Electric Boat, recently clinched a modification contract involving the Columbia Class submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of GD’s Deal
Valued at $986.8 million, the contract is expected to be completed by December 2031. Per the terms of the modification contract, the company will provide additional component development, class lead yard support and Submarine Industrial Base (SIB) supplier development enhancements supporting Columbia-class ballistic missile submarines and the nuclear shipbuilding enterprise.
The majority of the work under this contract will be executed in Groton, CT.
GD’s Growth Prospects
Rising military conflicts, terrorism and border disputes have driven nations across the globe to focus more on national security, with investments in enhancing their submarine fleet. This surge is fuelled by the increasing demand for advanced technologies like stealth capabilities, underwater surveillance and long-range strike systems, as well as the growing complexity of modern naval warfare.
This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 7.6% for the global submarine market during the 2025-2030 time period.
This is likely to benefit General Dynamics, a prominent contractor in the submarine market. Its Electric boat business division is responsible for all aspects of design and engineering and leads the construction of Columbia-class ballistic missiles and Virginia-class attack submarines.
Opportunities for Other Defense Players
Other defense companies that are likely to enjoy the perks of the expanding global submarine market have been discussed below.
Huntington Ingalls Industries (HII - Free Report) : Through its Newport News Shipbuilding division, HII is involved in producing the Columbia-class and Virginia-class submarines, two key assets of the U.S. Navy. The company also provides fleet services to its submarines around the world, offering modernization, repair and installation services.
Huntington has a long-term (three to five years) earnings growth rate of 11%. The Zacks Consensus Estimate for HII’s 2025 sales indicates year-over-year growth of 3.3%.
BAE Systems (BAESY - Free Report) : It plays a vital role in the production of advanced submarines, particularly in the United Kingdom’s defense sector. BAE Systems is the primary manufacturer of the Astute-class nuclear submarines, which are integral to the Royal Navy's fleet.
BAE Systems has a long-term earnings growth rate of 13.4%. The Zacks Consensus Estimate for BAESY’s 2025 sales indicates year-over-year growth of 62.6%.
Northrop Grumman Corporation (NOC - Free Report) : It is a renowned provider of missile launch systems for naval submarines. The company manufactures Launcher Subsystem hardware to support the Columbia and Dreadnought common missile compartment program.
Northrop has a long-term earnings growth rate of 3.3%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 2.8%.
GD Stock’s Price Movement
Shares of GD have lost 1.1% in the past month against the industry’s 1.1% growth.
Image Source: Zacks Investment Research
GD’s Zacks Rank
GD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.