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General Dynamics Wins $300M Deal to Support Trident Submarine

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General Dynamics Corp.’s (GD - Free Report) Mission Systems business division recently clinched a contract to procure fire control system and guided missile submarines attack weapon control system for Trident II (D-5) Fleet Ballistic Missile Submarines. Work related to this deal is projected to be over by Dec 30, 2024.

Valued at $300 million, the contract has been awarded by the Strategic Systems Programs, Washington, D.C. Majority of the task will be executed in Pittsfield, MA. The deal will cater to the U.S. Navy and the United Kingdom.

What’s Favoring General Dynamics?

The United States is strategically strengthening its naval power by upgrading missile submarines due to the rising widespread geo-political tensions across the world.  To this end, it is imperative to mention that General Dynamics has a 50-year legacy of providing advanced fire-control systems for all of the Navy’s submarine programs, both attack and ballistic missile. Currently, it is developing and integrating commercial off-the-shelf software and hardware upgrades to improve the tactical control capabilities for several submarine classes.

Now, Trident II (D5) ballistic-missile submarines are considered to be among the most effective warships ever built. Naturally, notable order flows for this program and its subsequent enhancement are being witnessed. The latest contract win is one such example.

Looking Ahead

Per a report by Market Research Future firm, the global submarine market is expected to showcase a CAGR of 7% from 2018 to 2025. Such projections will not only increase the submarine production demand but also lead to a rise in regular system modifications and upgrades of different submarine variants going forward. As submarines are a vital part of the U.S. navy fleets in combat, surveillance, counter- surveillance and other missions, we may expect General Dynamics to benefit significantly in the days ahead.

Price Performance

Shares of General Dynamics have gained 13.1% in a year compared with the industry’s 25.2% rally.

Zacks Rank & Key Picks    

General Dynamics currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are L3Harris Technology Inc (LHX - Free Report) , Leidos Holdings, Inc. (LDOS - Free Report) and Air Industries Group (AIRI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

L3Harris’ long-term growth estimate currently stands at 10.4%. The company delivered average positive earnings surprise of 5.02% in the last four quarters.

Leidos delivered average positive earnings surprise of 8.93% in the last four quarters. Its long-term growth estimate currently stands at 7.5%.

Air Industries Group delivered average positive earnings surprise of 52.78% in the last four quarters. The Zacks Consensus Estimate for 2019 loss has increased 63.6% to 4 cents over the past 60 days.

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