General Dynamics (GD) Wins Deal to Aid Abrams Tank Systems

·3-min read

General Dynamics Corp.’s GD business unit, Land Systems, recently won a modification contract to provide technical support for Abrams Tank Systems. The U.S. Army Contracting Command, Detroit Arsenal, MI, has offered the award.

Valued at $38.9 million, the contract is expected to get completed by Apr 30, 2023. Work related to this deal will be performed in Sterling Heights, MI.

What’s Favoring General Dynamics?

Amid the rising geopolitical tensions and the recent tiff between Russia and Ukraine, the United States and other countries globally 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’ Abrams battle tank enjoys significant demand from the U.S Army and several U.S. allies due to its advanced features and the company’s continuous efforts to configure it with additional advanced capabilities. The latest contract win is a bright example of that.

Growth Prospects

Going forward, the demand for the main battle tank is likely to soar. Per a report from Mordor Intelligence, the main battle tank market is projected to witness a CAGR of more than 3% during the 2022-2027 period. Such abounding growth trends indicate ample growth opportunities for General Dynamics as it enjoys a lucrative position in the main battle tank market.

One defense player likely to benefit from such favorable trends is BAE Systems BAESY.

BAE System’s 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 also has the ability to engage both hard and soft targets and can operate across a spectrum of high-intensity conflicts, counter insurgency and peacekeeping roles.

The long-term earnings growth rate of BAESY is pegged at 7.2%. The Zacks Consensus Estimate for 2022 earnings indicates a surge of 21.4% from the prior year reported figure.

Price Performance

Shares of General Dynamics have rallied 22.8% in the past year against the industry’s decline of 40.4%.

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Zacks Rank & Stocks to Consider

General Dynamics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same sector are Kratos Defense & Security Solutions. KTOS and TransDigm Group TDG, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Kratos’ 2022 sales suggests growth of 10.3% from the prior year’s estimated figure. The Zacks Consensus Estimate for Kratos’ 2022 earnings has improved 2.9% over the past 60 days.

Kratos has a four-quarter earnings surprise of 87.70%. In the last reported quarter, KTOS delivered an earnings surprise of 300%.

The Zacks Consensus Estimate for TransDigm’s 2022 earnings suggests growth of 36.4% from the prior-year figure. The Zacks Consensus Estimate for TransDigm’s 2022 sales suggests growth of 12.8% from the prior-year figure.

TransDigm has a four-quarter earnings surprise of 6.61%. TDG boasts a long-term earnings growth rate of 22.2%.

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