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General Dynamics (GD) Wins Deal to Aid Abrams Battle Tank
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General Dynamics Corp.’s (GD - Free Report) Land Systems unit recently clinched a modification contract to provide technical support for its Abrams battle tank systems. The award has been offered by the Army Contracting Command, Detroit Arsenal, MI.
Valued at $32 million, the contract is projected to be completed by Sep 30, 2025. Work related to this deal will be carried out in Sterling Heights, MI.
What’s Favoring General Dynamics?
Military spending has witnessed an increase in the past few years to modernize and upgrade the defense system for meeting the current warfare requirements. In such a scenario, the demand for military tanks has increased manifold as these form an integral part of any land warfare system.
Thus, General Dynamics stands to benefit from the increased demand as its Land Systems is the sole-source producer of two foundational products central to the U.S. Army’s warfighting capabilities — the M1A2Abrams main battle tank and the Stryker wheeled combat vehicle.
The company strives to continuously improvise the platform and provide an upgraded version to its customers. GD is maximizing the effectiveness and lethality of the Army’s tank fleet with next-generation Abrams upgrades, providing technological advancements in communications, power generation, fuel efficiency, optics and armor.
General Dynamics is also developing an Abrams SEPv4 configuration with additional advanced capabilities, incorporating next-generation electronic architecture technology. This will allow the platform to adopt and incorporate transformative capabilities in the future.
Such capability in manufacturing combat vehicles must have enabled General Dynamics to win multiple orders for the Abrams Tank as well as system and sustainment technical support services contracts involving the same, like the latest one. This has bolstered the defense giant’s revenue generation prospects from combat vehicles.
Growth Prospects
The changing dynamics of the military landscape and the rising geopolitical tension have made it mandatory for a country to continuously evolve and strengthen its defense structure. To this end, military tanks form an integral part of any combat mission and land warfare affair.
Going forward, per a report from Fortune Business Insights, the global armored vehicle market is projected to witness a CAGR of 6.2% during 2023-2030. The expanding size of this market should benefit General Dynamics, with its Land Systems unit being the sole-source producer of two renowned lethal tank fleet — the Abrams battle tank and the Stryker wheeled combat vehicle.
Other defense majors that are likely to benefit from the growing global armored vehicle market are BAE Systems Plc (BAESY - Free Report) , Northrop Grumman (NOC - Free Report) and RTX Corp. (RTX - Free Report) .
BAE Systems designs, manufactures, upgrades and supports tracked, specialty-tracked, and wheeled and amphibious combat vehicles. Some of BAE Systems’ combat vehicles are the Armored Multi-Purpose Vehicle, CV90, CV90MkIV, CV90 IFV, etc.
The company currently boasts a long-term earnings growth rate of 14%. The Zacks Consensus Estimate for BAESY’s 2023 sales indicates an improvement of 33.6% from the 2022 reported figure.
Northrop Grumman specializes in innovating low-cost, highly reliable and precise weapons and ammunition for battle tanks. It is the world’s top producer of medium-caliber live and training ammunition and gun systems, with more than 5 million units built in the last five years.
The company currently boasts a long-term earnings growth rate of 4.1%. The consensus estimate for NOC’s 2023 sales implies an improvement of 5.7% from the 2022 reported figure.
RTX is currently teaming up with a handful of companies including American Rheinmetall Vehicles as well as Textron, L3Harris Technologies and a few more to meet the U.S. Army’s current requirement for a true, next-generation Optionally Manned Fighting Vehicle, namely the Lynx XM30 Combat Vehicle. This is a next-generation, tracked, armored fighting vehicle designed to address the critical challenges of the future battlefield.
The company currently boasts a long-term earnings growth rate of 8.1%. The consensus mark for RTX’s 2023 sales implies an improvement of 9.9% from the 2022 reported figure.
Price Movement
In the past year, shares of General Dynamics have risen 3.1% against the industry’s 3.8% decline.
Image: Bigstock
General Dynamics (GD) Wins Deal to Aid Abrams Battle Tank
General Dynamics Corp.’s (GD - Free Report) Land Systems unit recently clinched a modification contract to provide technical support for its Abrams battle tank systems. The award has been offered by the Army Contracting Command, Detroit Arsenal, MI.
Valued at $32 million, the contract is projected to be completed by Sep 30, 2025. Work related to this deal will be carried out in Sterling Heights, MI.
What’s Favoring General Dynamics?
Military spending has witnessed an increase in the past few years to modernize and upgrade the defense system for meeting the current warfare requirements. In such a scenario, the demand for military tanks has increased manifold as these form an integral part of any land warfare system.
Thus, General Dynamics stands to benefit from the increased demand as its Land Systems is the sole-source producer of two foundational products central to the U.S. Army’s warfighting capabilities — the M1A2Abrams main battle tank and the Stryker wheeled combat vehicle.
The company strives to continuously improvise the platform and provide an upgraded version to its customers. GD is maximizing the effectiveness and lethality of the Army’s tank fleet with next-generation Abrams upgrades, providing technological advancements in communications, power generation, fuel efficiency, optics and armor.
General Dynamics is also developing an Abrams SEPv4 configuration with additional advanced capabilities, incorporating next-generation electronic architecture technology. This will allow the platform to adopt and incorporate transformative capabilities in the future.
Such capability in manufacturing combat vehicles must have enabled General Dynamics to win multiple orders for the Abrams Tank as well as system and sustainment technical support services contracts involving the same, like the latest one. This has bolstered the defense giant’s revenue generation prospects from combat vehicles.
Growth Prospects
The changing dynamics of the military landscape and the rising geopolitical tension have made it mandatory for a country to continuously evolve and strengthen its defense structure. To this end, military tanks form an integral part of any combat mission and land warfare affair.
Going forward, per a report from Fortune Business Insights, the global armored vehicle market is projected to witness a CAGR of 6.2% during 2023-2030. The expanding size of this market should benefit General Dynamics, with its Land Systems unit being the sole-source producer of two renowned lethal tank fleet — the Abrams battle tank and the Stryker wheeled combat vehicle.
Other defense majors that are likely to benefit from the growing global armored vehicle market are BAE Systems Plc (BAESY - Free Report) , Northrop Grumman (NOC - Free Report) and RTX Corp. (RTX - Free Report) .
BAE Systems designs, manufactures, upgrades and supports tracked, specialty-tracked, and wheeled and amphibious combat vehicles. Some of BAE Systems’ combat vehicles are the Armored Multi-Purpose Vehicle, CV90, CV90MkIV, CV90 IFV, etc.
The company currently boasts a long-term earnings growth rate of 14%. The Zacks Consensus Estimate for BAESY’s 2023 sales indicates an improvement of 33.6% from the 2022 reported figure.
Northrop Grumman specializes in innovating low-cost, highly reliable and precise weapons and ammunition for battle tanks. It is the world’s top producer of medium-caliber live and training ammunition and gun systems, with more than 5 million units built in the last five years.
The company currently boasts a long-term earnings growth rate of 4.1%. The consensus estimate for NOC’s 2023 sales implies an improvement of 5.7% from the 2022 reported figure.
RTX is currently teaming up with a handful of companies including American Rheinmetall Vehicles as well as Textron, L3Harris Technologies and a few more to meet the U.S. Army’s current requirement for a true, next-generation Optionally Manned Fighting Vehicle, namely the Lynx XM30 Combat Vehicle. This is a next-generation, tracked, armored fighting vehicle designed to address the critical challenges of the future battlefield.
The company currently boasts a long-term earnings growth rate of 8.1%. The consensus mark for RTX’s 2023 sales implies an improvement of 9.9% from the 2022 reported figure.
Price Movement
In the past year, shares of General Dynamics have risen 3.1% against the industry’s 3.8% decline.
Image Source: Zacks Investment Research
Zacks Rank
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.