General Dynamics Corporation’s GD business unit, Electric Boat, recently clinched a modification contract involving Virginia Class Block V submarines. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of GD’s Deal
Valued at $188 million, the contract is expected to be completed by September 2035. Per the terms of the deal, General Dynamics will provide construction spares for Virginia Class Block V submarines.
The work related to this deal will be executed in multiple locations, including Sunnyvale, CA; South Yorkshire, United Kingdom; Westfield, MA, and several others.
What’s Favoring GD Stock?
With countries worldwide enhancing their defense capabilities, spending on advanced military systems, including submarines, has been rapidly rising. General Dynamics, a renowned manufacturer of submarines that provides planning yard support and associated solutions for these submarines, enjoys a steady stream of contracts for submarine manufacturing and associated services like the latest one.
Virginia Class submarines are built for modern missions, including anti-submarine warfare, surface combat, special operations and intelligence gathering. Effective in coastal and deep waters, their stealthy design and compatibility with other military systems make them vital to the U.S. Navy, strengthening national security and surveillance capabilities.
Such notable features of the aforementioned submarines are likely to have been boosting its demand.
GD’s Growth Prospects
Rising military conflicts, terrorism and border disputes have driven nations to focus more on national security and investments in enhancing their submarine fleets. This surge is fueled by the increasing demand for advanced technologies like stealth capabilities, underwater surveillance and long-range strike systems, as well as the growing complexity of modern naval warfare.
This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 7.6% for the global submarine market during the 2025-2030 time period. This is likely to benefit General Dynamics, a prominent contractor in the submarine market. Its Electric boat business division is responsible for all aspects of design and engineering and leads the construction of Columbia-class ballistic missiles and Virginia-class attack submarines.
Opportunities for Other Defense Players
Other defense companies that are likely to enjoy the perks of the expanding global submarine market have been discussed below:
Huntington Ingalls Industries HII: Through its Newport News Shipbuilding division, HII is involved in producing the Columbia-class and Virginia-class submarines, two key assets of the U.S. Navy. The company provides fleet services to its submarines around the world, offering modernization, repair and installation services.
Huntington has a long-term (three to five years) earnings growth rate of 7.4%. The Zacks Consensus Estimate for HII’s 2025 sales indicates year-over-year growth of 58.4%.
BAE Systems BAESY: It plays a vital role in the production of advanced submarines, particularly for the United Kingdom’s defense sector. BAE Systems is the primary manufacturer of the Astute-class nuclear submarines, which are integral to the Royal Navy's fleet.
BAE Systems has a long-term earnings growth rate of 11.1%. The Zacks Consensus Estimate for BAESY’s 2025 sales indicates year-over-year growth of 58.4%.
Northrop Grumman Corporation NOC: It is a renowned provider of missile launch systems for naval submarines. The company manufactures Launcher Subsystem hardware to support the Columbia and Dreadnought common missile compartment program.
Northrop has a long-term earnings growth rate of 19%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 3.4%.
GD Stock Price Movement
Shares of General Dynamics have dropped 1.5% in the past month compared with the industry’s 1.9% decline.
Image Source: Zacks Investment Research
GD’s Zacks Rank
GD currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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