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General Dynamics (GD) Wins $58.9M Contract to Support DDG 51
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General Dynamics Corporation’s(GD - Free Report) business unit, Bath Iron Works, recently clinched a $58.9 million contract to provide lead yard support for DDG 51 Arleigh Burke-class guided missile destroyers. The contract has been awarded by Naval Sea Systems Command, Washington, D.C.
The majority of the work related to this contract will be executed in Bath, ME. The contract is expected to be completed by November 2024. This contract includes options, which on being exercised, will bring the cumulative value of this contract to $418 million.
What’s Favoring General Dynamics
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities.
Such increased spending tends to benefit General Dynamics as its Bath Iron Works business unit excels in manufacturing navy ships and provides modernization and lifecycle support for the US Navy.
In this context, it is imperative to mention that GD’s DDG-51 Arleigh Burke-class guided missile destroyers witness significant demand owing to its wide range of advanced warfighting capabilities in multi-threat air, surface and subsurface environments. It also offers protection against a wide range of threats including ballistic missiles. Its strong demand can be gauzed by 10 ships in backlog scheduled for delivery through 2029.
Such strong demand, in tandem with excellence in providing unique capabilities in ship building, should continue to boost the company’s order book in the long run. This is likely to enhance its revenue-generation prospects.
Growth Prospects & Peer Moves
As demand for an efficient security system, that can strengthen naval sea warfare capabilities, rises, so does the prospect of the naval ship market. Looking ahead, per a report from Mordor Intelligence firm, the naval vessels market is projected to witness a CAGR of 13.3% during the 2023-2028 period. This market growth opportunity should boost General Dynamics’ operating results as it is one of the prime contractors of navy ships.
Other defense majors poised to benefit from the expanding naval vessels market areBAE Systems(BAESY - Free Report) , Lockheed Martin(LMT - Free Report) and Huntington Ingalls Industries (HII - Free Report) .
BAE Systems designs, builds, commissions, repairs and supports a full range of complex naval ships, from offshore patrol vessels to aircraft carriers. This gives customers the capability to carry out extensive naval operations. Its Queen Elizabeth Class Aircraft Carriers are the largest warships ever constructed in the United Kingdom.
BAESY boasts a long-term earnings growth rate of 13.6%. The Zacks Consensus Estimate for BAE Systems’ 2023 sales indicates growth of 33.6% from 2022 levels.
Lockheed manufactures Littoral Combat Ships (LCS). Its freedom-variant LCS USS Nantucket (LCS 27) is a resilient, flexible warship designed to encounter the evolving missions of the U.S. Navy. LCS 27 is particularly designed to conduct close-to-shore missions.
Lockheed’s long-term earnings growth rate is pegged at 8.6%. The Zacks Consensus Estimate of LMT’s 2023 sales implies growth rate of 0.9% from the prior-year figure.
Huntington Ingalls’ business segment designs and constructs non-nuclear ships for the U.S. Navy and the U.S. Coast Guard including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters.
The long-term earnings growth of Huntingtonis pegged at 8%. The Zacks Consensus Estimate of HII’s 2023 sales calls for growth rate of 3.8% from a year ago.
Price Performance
Shares of General Dynamics have increased 15.1% in the past six months against the industry’s 7.5% decline.
Image: Bigstock
General Dynamics (GD) Wins $58.9M Contract to Support DDG 51
General Dynamics Corporation’s(GD - Free Report) business unit, Bath Iron Works, recently clinched a $58.9 million contract to provide lead yard support for DDG 51 Arleigh Burke-class guided missile destroyers. The contract has been awarded by Naval Sea Systems Command, Washington, D.C.
The majority of the work related to this contract will be executed in Bath, ME. The contract is expected to be completed by November 2024. This contract includes options, which on being exercised, will bring the cumulative value of this contract to $418 million.
What’s Favoring General Dynamics
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities.
Such increased spending tends to benefit General Dynamics as its Bath Iron Works business unit excels in manufacturing navy ships and provides modernization and lifecycle support for the US Navy.
In this context, it is imperative to mention that GD’s DDG-51 Arleigh Burke-class guided missile destroyers witness significant demand owing to its wide range of advanced warfighting capabilities in multi-threat air, surface and subsurface environments. It also offers protection against a wide range of threats including ballistic missiles. Its strong demand can be gauzed by 10 ships in backlog scheduled for delivery through 2029.
Such strong demand, in tandem with excellence in providing unique capabilities in ship building, should continue to boost the company’s order book in the long run. This is likely to enhance its revenue-generation prospects.
Growth Prospects & Peer Moves
As demand for an efficient security system, that can strengthen naval sea warfare capabilities, rises, so does the prospect of the naval ship market. Looking ahead, per a report from Mordor Intelligence firm, the naval vessels market is projected to witness a CAGR of 13.3% during the 2023-2028 period. This market growth opportunity should boost General Dynamics’ operating results as it is one of the prime contractors of navy ships.
Other defense majors poised to benefit from the expanding naval vessels market areBAE Systems(BAESY - Free Report) , Lockheed Martin(LMT - Free Report) and Huntington Ingalls Industries (HII - Free Report) .
BAE Systems designs, builds, commissions, repairs and supports a full range of complex naval ships, from offshore patrol vessels to aircraft carriers. This gives customers the capability to carry out extensive naval operations. Its Queen Elizabeth Class Aircraft Carriers are the largest warships ever constructed in the United Kingdom.
BAESY boasts a long-term earnings growth rate of 13.6%. The Zacks Consensus Estimate for BAE Systems’ 2023 sales indicates growth of 33.6% from 2022 levels.
Lockheed manufactures Littoral Combat Ships (LCS). Its freedom-variant LCS USS Nantucket (LCS 27) is a resilient, flexible warship designed to encounter the evolving missions of the U.S. Navy. LCS 27 is particularly designed to conduct close-to-shore missions.
Lockheed’s long-term earnings growth rate is pegged at 8.6%. The Zacks Consensus Estimate of LMT’s 2023 sales implies growth rate of 0.9% from the prior-year figure.
Huntington Ingalls’ business segment designs and constructs non-nuclear ships for the U.S. Navy and the U.S. Coast Guard including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters.
The long-term earnings growth of Huntingtonis pegged at 8%. The Zacks Consensus Estimate of HII’s 2023 sales calls for growth rate of 3.8% from a year ago.
Price Performance
Shares of General Dynamics have increased 15.1% in the past six months against the industry’s 7.5% decline.
Image Source: Zacks Investment Research
Zacks Rank
General Dynamics currently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.