Aerojet Rocketdyne Holdings, Inc. AJRD recently announced the expansion of its production capacity as it plans to open a massive 379,000-square-foot manufacturing facility in Huntsville, AL to scale up its operations to meet defense product demand. The new facility is anticipated to be commissioned in 2023.
Benefits of the Expansion
The company had set foot in Huntsville six years back with its Defense Headquarters. Since it began its operations in the region, the company has grown its employee base in the area by more than 700%, thus exemplifying strong work base strength to meet the growing demand.
With an already manufacturing unit in Huntsville, the new giant facility solidifies Aerojet Rocketdyne’s position in the region. Moreover, the recent expansion plan could be prudent as the location boasts engineering expertise strength, which will assist in meeting the nation’s defense production needs.
Also, the facility is strategically located in proximity to its government and other allied customers. This may assist the company in winning multiple orders involving rocket and missile propulsion products.
Such additions to the manufacturing capacity should boost the stock’s probable defense contracts, thereby bolstering its future revenues.
The defense landscape continuously evolves to meet the current warfare needs. Defense companies strive to provide innovative solutions and products to their customers to ensure a continuous inflow of orders from customers. Moreover, companies get into expansion strategies by building facilities to invest in new capabilities and ease their operations.
Apart from AJRD, defense majors that have invested in expansion strategies are as follows:
In July 2022, Northrop Grumman NOC announced the construction of a new 113,000-square-foot facility in West Virginia. The facility will increase the company’s capacity within the defense industrial base to ensure the delivery of current and future weapons to meet warfighter needs.
Northrop Grumman’s long-term earnings growth rate is pegged at 2.9%. NOC shares have returned 45.4% in the past year.
In October 2022, Lockheed Martin LMT announced the opening of a new All-Up Round III facility at Camden Operations in Arkansas. The 85,000-square-foot expansion supports increased production capacity for the PAC-3 Missile Segment Enhancement, the world’s most advanced air defense missile.
Lockheed Martin’s long-term earnings growth rate is pegged at 6.2%. Shares of LMT have increased 39.4% in the past year.
In October 2022, BAE Systems BAESY opened its new $150 million engineering and production facility in Austin, TX. The 390,000-square-foot facility is mainly for manufacturing needs. The new campus also includes engineering design, laboratory and office space.
The long-term earnings growth rate of BAE Systems is pegged at 13.7%. Shares of BAESY have returned 22.8% to its investors in the past year.
In the past year, shares of Aerojet Rocketdyne have rallied 17.9% compared with the industry’s growth of 1.6%.
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Aerojet Rocketdyne 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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