General Dynamics (GD) Wins $147M Deal for Stryker Vehicle
General Dynamics Corp.’s GD business unit, Land Systems, recently clinched a contract to supply flat-bottom hull Stryker vehicles. The award has been offered by the U.S. Army Contracting Command, Detroit Arsenal, MI.
Valued at $146.7 million, the contract is estimated to be completed by Nov 30, 2024.
What’s Favoring General Dynamics?
Military tanks are the primary offensive weapons in land missions. An efficient armored military tank enables the army to carry out any mission by direct fire. The recent clash between Ukraine and Russia has accelerated the pace of upgrading the defense landscape with technologically advanced arms and ammunitions, which, in turn, has led to increased investments in military tanks.
In this context, it is imperative to mention that the increased focus on technologically advanced combat vehicles is likely to benefit General Dynamics as its Land System business unit is a prime contractor of land combat vehicles like Stryker. It provides innovative design, engineering, technology, production and full life-cycle support for land combat vehicles worldwide.
General Dynamics’ expertise and in-depth experience in building and supporting combat vehicles, coupled with a customer-first focus and a seasoned supply-chain network, have been helping it to win multiple contracts from the U.S. Army and its allies. The latest contract win is a bright example of that, which in turn should boost GD’s revenue generation prospects in the coming days.
Growth Prospects
The changing dynamics of the military landscape and the rising geopolitical tension make it mandatory for a country to continuously evolve and strengthen its defense structure. To this end, military tanks form an integral part of any military missions and arm them in their land warfare affairs.
In this context, per a report from Markets and Markets, the global armored vehicle market is projected to witness a CAGR of 3.1% during the 2022-2027 period. Such abounding growth trends indicate ample growth opportunities for General Dynamics as it enjoys a lucrative position in the armored vehicle market.
A few defense primes that can reap the gains from the expanding armored vehicle market are BAE Systems BAESY, Northrop Grumman NOC and Raytheon Technologies RTX.
BAE System’s Challenger 2 is heavily armored and highly mobile, designed for use in the direct fire zone. Its primary role is to destroy or neutralize the armor. It also has the ability to engage both hard and soft targets and can operate across a spectrum of high-intensity conflicts, counter insurgencies and peacekeeping roles.
The long-term earnings growth rate of BAESY is pegged at 13.7%. The Zacks Consensus Estimate for BAESY’s 2022 sales implies an improvement of 17%.
Northrop Grumman is the world’s top producer of medium-caliber live and training ammunition and gun systems, with more than five million units built in the last five years. It specializes in innovating low-cost, highly reliable precise weapons and ammunition for artillery and mortar systems, medium-caliber weapon platforms, battle tanks and individual soldiers.
Northrop Grumman has a long-term earnings growth rate of 2.9%. The Zacks Consensus Estimate for NOC’s 2022 sales implies an improvement of 1.9%.
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, armored fighting vehicle designed to address the critical challenges of the future battlefield.
Raytheon’s long-term earnings growth rate is pegged at 9.5%. The Zacks Consensus Estimate for RTX’s 2022 sales indicates an improvement of 4.3%.
Price Performance
Shares of General Dynamics have rallied 25.6% in the past 12 months against the industry’s decline of 7.4%.
Image Source: Zacks Investment Research
Zacks Rank
General Dynamics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
Bae Systems PLC (BAESY) : Free Stock Analysis Report
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
