General Dynamics (GD) Wins Deal for Supplying Bomb Bodies

General Dynamics Corporation’s GD business unit, Ordinance and Tactical Systems (“OTS”), recently clinched a modification contract to offer bomb bodies to support the U.S. Army. The deal has been awarded by the U.S. Army Contracting Command, Rock Island Arsenal, IL.

Valued at $14.4 million, the contract is expected to concludeby Dec 31, 2023. The work related to the deal will be performed in Garland, TX.

General Dynamics’ Prospects in Munitions

General Dynamics’ OTS unit designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces, including M2/M2-A1 heavy machine guns and MK19/MK47 grenade launchers. OTS also produces next-generation weapon systems for shipboard and aircraft applications, including high-speed Gatling guns for all U.S. fighter aircraft, including the F-35 Joint Strike Fighter.

The company also maintains a market-leading position in the supply of Hydra-70 rockets, general-purpose bombs and bomb bodies, large-caliber tank ammunition, medium-caliber ammunition, military propellants, mortar and artillery projectiles.

The defense prime’s proven expertise in manufacturing technologically advanced ammunition results in several contract wins from Pentagon. The latest contract win for bomb bodies is a bright example of that.

Growth Prospects

Nations are reinforcing their defense structures to deter any war-like situation and fortify their warfare capabilities to face any sudden assault. This has led to a surge in demand for next-generation arms and ammunition, which will enable the army to carry out military expeditions most effectively and efficiently.

In this context, per the report from Mordor Intelligence, the ammunition market is projected to witness a CAGR of 3.5% during the 2022-2031 period. Such abounding growth trends indicate ample growth opportunities for GD as it enjoys a lucrative position in the arms and ammunition market.

A few defense players whoare likely to benefit from such favorable trends are BAE Systems BAESY, Northrop Grumman NOC and Lockheed Martin LMT.

BAE System’s small arms ammunition manufacturing facility at Radway Green has the most-advanced ammunition production capabilities in the world. BAE Systems can produce more than one million rounds per day of small arms ammunition in 5.56mm and 7.62mm NATO calibers, including ball, tracer and blank natures.

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.

Northrop Grumman specializes in innovating low-cost, highly reliable and precise weapons and ammunition for artillery and mortar systems, medium-caliber weapons platforms, battle tanks and individual soldiers. The company is the world’s top producer of medium-caliber ammunition and gun systems and produces a complete family of large-caliber tactical and target practice ammunition.

Northrop Grumman’s long-term earnings growth rate is pegged at 6.1%. Shares of NOC have returned 26.4% value to investors in the past year.

Lockheed Martin is a leader in providing vertical launching systems and munitions for the Navy, with products such as the MK 41, the Single Cell Launcher, the Extensible Launching System and the Vertical Launch Anti-Submarine Rocket.

Lockheed Martin’s long-term earnings growth rate is pegged at 5.7%. Shares of LMT have returned 14.1% value to investors in the past year.

Price Performance

Shares of General Dynamics have rallied 18.1% in the past year against the industry’s decline of 41.9%.

Image Source: Zacks Investment Research

Zacks Rank

General Dynamics currently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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