General Dynamics (GD) Wins $146M Deal for Its Combat Vehicles
General Dynamics Corp.’s GD business unit — Land Systems — recently clinched a contract involving a handful of its combat vehicles. The award has been offered by the Defense Logistics Agency Land and Maritime, Columbus, OH.
Details of the Deal
Valued at $145.5 million, the contract is expected to be completed by Jul 29, 2029. Per the terms, General Dynamics will supply multiple spare parts for the Abrams Main Battle Tank, Stryker Family of Vehicles, Light Armored Vehicle (LAV) Family of Vehicles, Cougar, Buffalo and RG-31.
The work related to this deal will be executed in Florida.
What’s Favoring General Dynamics?
Amid the rising geopolitical tensions and the recent clash between Russia and Ukraine, the United States and other countries have increased their spending manifold for upgrading defense systems and improving warfare capabilities. In this context, main battle tanks form an integral part of any nation’s defense system.
General Dynamics’ Land Systems is a global leader in the design, development, production, support and sustainment of tracked and wheeled military equipment. Its foundation is built upon the strength of the Abrams Main Battle Tank, the Stryker and LAV family of wheeled and specialty vehicles, the AJAX armored brigade of fighting vehicles, and autonomous solutions like the MUTT and S-MET platforms. No doubt, GD’s combat vehicles enjoy significant demand from the U.S Army and several U.S. allies due to their advanced features and the company’s continuous efforts to configure them with additional advanced capabilities. The latest contract win is a bright example of that.
Growth Prospects
The global armored vehicle market’s size is likely to expand at a CAGR of 5.8% over the 2020-2025 period, per a report from the research firm, MarketsandMarkets. The expanding size of the market will not only benefit General Dynamics but also defense majors like Northrop Grumman NOC, Raytheon Technologies RTX, and BAE Systems Plc BAESY, which enjoy a prime position in the combat vehicle space.
Northrop Grumman specializes in innovating low-cost, highly reliable, precise weapons and ammunition for artillery and mortar systems, medium-caliber weapon platforms, and battle tanks. It is also a pioneer in hardened electronics technologies used in weapon applications and produces precision guidance kits that employ a common technology base to transform conventional artillery and mortar munitions into precise, Global Positioning System (GPS)-guided weapons.
Northrop Grumman has a long-term earnings growth rate of 6.1%. The Zacks Consensus Estimate for NOC’s 2022 sales implies an improvement of 2.6% from the 2021 reported figure.
Raytheon is currently teaming up with American Rheinmetall Vehicles to meet the U.S. Army’s current requirement for a true, next-generation Optionally Manned Fighting Vehicle, namely the Lynx Infantry Fighting Vehicle. The Lynx Infantry Fighting Vehicle is a next-generation, tracked and armored fighting vehicle designed to address the critical challenges of future battlefields.
Raytheon’s long-term earnings growth rate is pegged at 10.5%. The Zacks Consensus Estimate for RTX’s 2022 sales indicates an improvement of 5.8% from the 2021 reported figure.
BAE Systems’ Challenger 2 is heavily armored, highly mobile, and designed for use in the direct fire zone. Its primary role is to destroy or neutralize armor. It can also engage both hard and soft targets and operate across a spectrum of high-intensity conflicts, counter-insurgency, and peacekeeping roles.
The long-term earnings growth rate of BAESY is pegged at 8.9%. The Zacks Consensus Estimate for BAESY’s 2022 sales indicates a surge of 20.4% from the prior-year reported figure.
Price Performance
Shares of General Dynamics have rallied 15.7% in the past year against the industry’s decline of 35.4%.
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Zacks Rank
General Dynamics currently carries a Zacks Rank #4 (Sell).
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