Yahoo Finance General Dynamics (GD) Wins $415M Deal to Aid Military Tanks
General Dynamics Corp.’s GD business unit, Land Systems, recently secured a modification contract to procure multiple items used in Abrams Main Battle Tank, Stryker Family of Vehicles, Light Armored Vehicle Family of Vehicles, Cougar, Buffalo and RG-31. The Defense Logistics Agency Land and Maritime, Columbus, OH has offered the
Valued at $414.7 million, the contract is expected to be completed by Sep 28, 2029.
What’s Favoring General Dynamics?
Military tanks are the primary offensive weapons in the land mission of the military. An efficient armored military tank enables the army to carry out any mission by direct fire. The recent clash between Ukraine and Russia has accelerated the pace of upgrading the defense landscape with technologically advanced arms and ammunitions, which, in turn, has led to increased investments in military tanks.
In this context, it is imperative to mention that the increased focus on technologically advanced combat vehicles is likely to benefit General Dynamics as its Land System business unit is a prime contractor of land combat vehicles for the U.S Navy. It provides innovative design, engineering, technology, production and full life-cycle support for land combat vehicles worldwide.
General Dynamics’ expertise and in-depth experience in building and supporting combat vehicles, coupled with a customer-first focus and a seasoned supply-chain network, have been helping it to win multiple contracts from the U.S. Army and its allies. The latest contract win is a bright example of that, which in turn should boost GD’s revenue generation prospects in the coming days.
Growth Prospects
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. To this end, military tanks form an integral part of any military missions and arm them in their land warfare affairs.
In this context, per a report from Markets and Markets, the global armored vehicle market is projected to witness a CAGR of 5.8% during the 2020-2025 period. Such abounding growth trends indicate ample growth opportunities for General Dynamics as it enjoys a lucrative position in the armored vehicle market.
A few defense primes that can reap the gains from the expanding armored vehicle market are BAE Systems BAESY, Northrop Grumman NOC and Raytheon Technologies RTX.
BAE System’s Challenger 2 is heavily armored and highly mobile, designed for use in the direct fire zone. Its primary role is to destroy or neutralize the armor. It also has the ability to engage both hard and soft targets and can operate across a spectrum of high-intensity conflicts, counter insurgencies and peacekeeping roles.
The long-term earnings growth rate of BAESY is pegged at 9.3%. The Zacks Consensus Estimate for BAESY’s 2022 sales implies an improvement of 24.2%.
Northrop Grumman is the world’s top producer of medium-caliber live and training ammunition and gun systems, with more than five million units built in the last five years. It specializes in innovating low-cost, highly reliable precise weapons and ammunition for artillery and mortar systems, medium-caliber weapon platforms, battle tanks and individual soldiers.
Northrop Grumman has a long-term earnings growth rate of 2.2%. The Zacks Consensus Estimate for NOC’s 2022 sales implies an improvement of 1.9%.
Raytheon is currently teaming up with American Rheinmetall Vehicles to meet the U.S. Army’s current requirement for a true, next-generation Optionally Manned Fighting Vehicle, namely the Lynx Infantry Fighting Vehicle. The Lynx Infantry Fighting Vehicle is a next-generation, tracked, armored fighting vehicle designed to address the critical challenges of the future battlefield.
Raytheon’s long-term earnings growth rate is pegged at 10.4%. The Zacks Consensus Estimate for RTX’s 2022 sales indicates an improvement of 6.1%.
Price Performance
Shares of General Dynamics have rallied 6% in the past three months compared with the industry’s rise of 3.2%.
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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.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
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