General Dynamics Corp.’s GD business unit, Land Systems, recently clinched a contract involving its M10 Booker Vehicles. The award has been offered by the Army Contracting Command, Detroit Arsenal, MI.  

Valued at $103.6 million, the contract is expected to be completed by Sept. 18, 2029. Per the terms of the deal, General Dynamics will supply tools and equipment to support initial fielding for the M10 Booker vehicles.

What’s Favoring GD Stock?

In the current landscape of modern warfare, growing territorial disputes and urban conflicts are driving increased investments in advanced ground combat vehicles, designed for counter-terrorism operations in addition to their traditional role in conventional cross-border warfare. Consequently, leading manufacturers of combat-tested armored vehicles, like General Dynamics, are seeing a robust stream of contracts, including the recent ones.  

Notably, General Dynamics’ Land Systems unit is a globally recognized designer and manufacturer of wheeled military vehicles. In particular, GD’s M10 Booker Combat is a highly lethal, survivable and mobile direct-fire combat vehicle, which boasts the capability to dominate ground threats on the multi-domain battlefield. It can move rapidly in a variety of terrain conditions to engage and destroy enemy combatants, bunkers, machine gun positions, fortifications and armored combat vehicles.

In May 2024, General Dynamics delivered the first M10 Booker vehicle to the U.S. Army. Earlier in July 2023, the company won a contract for the second phase of LRIP for these vehicles, which called for the delivery of 26 additional Booker vehicles to the U.S. Army. This, along with the latest contract win, reflects the solid demand that the Booker Vehicles enjoy in the armored vehicle market, which should boost the company’s future revenues.

GD Stock’s Prospect in Armored Vehicle Market

The demand for more versatile and agile combat vehicles has expanded significantly over the past decade. This can be attributed to escalating geopolitical tensions and territorial disputes, a growing need for advanced ground combat vehicles in urban warfare as well as the advent of more technologically sophisticated armored vehicles capable of responding to a variety of threats.

This might have prompted the Markets and Markets firm to project a CAGR of 3.3% for the global armored vehicle market during 2024-2029.

Such a solid market growth opportunity should significantly boost General Dynamics, with its Land Systems being a forerunner in manufacturing combat vehicles. Notably, this unit is a leading provider of tracked and wheeled military equipment.  Some of its renowned products, other than the M10 Booker, are the Abrams Main Battle Tank, the Stryker and LAV family of wheeled and specialty vehicles, as well as the AJAX armored brigade of fighting vehicles.

Opportunities for GD’s Peers

Other defense majors that are likely to gain from the expanding global armored vehicle market are discussed below:

BAE Systems BAESY: It designs, manufactures, upgrades and supports tracked, specialty-tracked, and wheeled and amphibious combat vehicles. Some of BAE Systems’ combat vehicles are the Armored Multi-Purpose Vehicle, CV90, CV90MkIV, CV90 IFV, etc.

BAE Systems boasts a long-term earnings growth rate of 12.2%. The consensus estimate for BAESY’s 2024 sales implies an improvement of 34.6% from the 2023 reported figure.

Northrop Grumman Corp. NOC: 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. Notably, its XM913 50mm Bushmaster Chain Gun, which is currently in production, is designed to be the primary weapon on the U.S. Army’s XM30 Mechanized Infantry Combat Vehicle.

Northrop’s long-term earnings growth rate is 8.7%. The consensus estimate for NOC’s 2024 sales implies an improvement of 4.6% from the 2023 reported figure.

RTX Corp. RTX: The company is currently part of Team Lynx, which is digitally designing America’s next-generation infantry fighting vehicle, XM30. Notably, the Lynx XM30 incorporates RTX’s weapons, sensors, artificial intelligence and system integration expertise.

RTX has a long-term earnings growth rate of 10.6%. The consensus estimate for RTX’s 2024 sales implies an improvement of 6.2% from the 2023 reported figure.

Price Performance

Shares of General Dynamics have surged 36.5% in the past year compared to the industry’s rise of 9%.

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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.

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