Yahoo Finance General Dynamics (GD) Wins Deal for Virginia Class Submarine
General Dynamics Corp.’s GD business unit, Electric Boat, recently secured a modification contract to perform planning and execution efforts for supporting the Virginia Class Submarine Program. The award has been offered by the Supervisor of Shipbuilding Conversion and Repair, Groton, CT.
Valued at $30.4 million, the contract is expected to be completed by Sep 30, 2024. Per the contract terms, Electric Boat will support the preliminary design, detailed design and qualification of Virginia Class Submarine capabilities.
Work related to this deal will be carried out in Groton, CT.
What’s Favoring General Dynamics?
In recent times, the United States and other countries have globally increased their spending manifold for the upgrade and betterment of defense systems fueled by the rising geopolitical tensions. Missile submarines with undersea warfare capabilities form an integral part of any nation’s defense system. To this end, it is imperative to mention that General Dynamics remains one of the two defense contractors on a worldwide basis that is equipped to build stealth missile submarines.
In fact, the Virginia-class submarine is one of the most advanced nuclear-powered multisession stealth submarines suitable for marine warfare. The submarine excels in littoral and open-ocean environments and collects intelligence that is critical to the full spectrum of warfare. They are also capable of extended submerged operations with superior stealth, endurance, mobility and firepower.
Such enhanced features made the Virgin-class submarine an ideal choice for the U.S Navy. This provides General Dynamics an edge, as it enjoys a dominant position as the manufacturer of nuclear-powered submarines.
Looking Ahead
Submarines play a very vital role in any defense system and the demand for more reliably-equipped submarines is expected to grow in the days ahead as nations strengthen their naval power. Evidently, per a report from Mordor Intelligence firm, the global submarine market is projected to witness more than 4% CAGR during the period of 2022-2031. Consequently, such strong growth trends highlight ample growth opportunities for General Dynamics, as it enjoys a lucrative position in the submarine market.
Other submarine makers that are likely to benefit from such favorable trends are BAE Systems BAESY, Huntington Ingalls Industries HII and Mitsubishi Heavy Industries MHVYF.
BAE Systems designs, builds, tests and commissions highly sophisticated nuclear-powered submarines that are capable of circumnavigating the globe without surfacing. Its Astute class submarines are the U.K.’s largest and most powerful attack submarines that can strike at targets up to 1,000 km from the coast with pinpoint accuracy.
The long-term earnings growth rate estimate for BAE Systems is pegged at 5.3%. Shares of BAESY have appreciated 34.8% in the past year.
Mitsubishi designs and manufactures submarines for the Japanese government. It is well known for its two submarines, namely SETOSHIO and SORYU.
The Zacks Consensus Estimate for Mitsubishi’s fiscal 2022 earnings indicates an improvement of 154.4% from the prior fiscal’s reported figure. Shares of MHVYF have increased 6.2% in the past month.
Huntington Ingalls is into designing and building nuclear-powered submarines for the U.S. Navy. The company holds a dominant position in the submarine industry, with the United States being a stalwart in the global defense space.
The Zacks Consensus Estimate for Huntington’s 2022 earnings has been revised 4.3% upward in the past 60 days. Shares of HII have gained 11.3% in the year-to-date period.
Price Movement
In the past year, shares of General Dynamics have gained 33.1% against the industry's 33.3% decline.
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Zacks Rank
General Dynamics currently carries a Zacks #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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