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General Dynamics (GD) Wins Contract to Support Abrams Tank

General Dynamics Corp.’s GD business unit, Land Systems, recently secured a modification contract to provide technical support for Abrams System. The award has been provided by the Army Contracting Command, Detroit Arsenal, MI.

Valued at 10.1 million, the contract is expected to be completed by May 16, 2025. Work related to this deal will be completed by Sterling Heights, MI.

What’s Favoring General Dynamics?

Over the past few years, there has been a significant expansion in military spending by nations across the globe. This is because the countries are increasingly focused on modernizing and upgrading their defense systems to meet the current warfare requirements. In such a scenario, the demand for military tanks has increased manifold as these tanks form an integral part of any land warfare system.

Amid such a solid demand trend, General Dynamics stands with Land Systems, the sole-source producer of two foundational products central to the U.S. Army’s warfighting capabilities — the M1A1 Abrams main battle tank and the Stryker wheeled combat vehicle.

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To further enhance its growth scope in the military tank market, General Dynamics is developing the SEPv3 version of the Abrams tank. The SEPv3 upgrade includes additional electrical power from an auxiliary power unit, network upgrades, stronger armor for greater protection, an ammo data link to interface with advanced ammunition and reduced maintenance strain.

Such an evolution in manufacturing state-of-the-art combat vehicles must have enabled General Dynamics to win multiple orders for the Abrams Tank as well as system and sustainment technical support services contracts involving the same, like the latest one. This has bolstered the defense giant’s revenue generation prospects from combat vehicles.

Growth Prospects

The changing dynamics of the military landscape and the rising geopolitical tension have made it mandatory for countries to continuously evolve and strengthen their defense structure. To this end, military tanks form an integral part of any combat mission and land warfare affair.

Going forward, per a report from the Mordor Intelligence firm, the global armored fighting vehicles market is projected to witness a CAGR of 5% during 2024-2029. The expanding size of this market should benefit General Dynamics, with its Land Systems unit being the sole-source producer of two renowned lethal tank fleets — the Abrams battle tank and the Stryker wheeled combat vehicle.

Other defense majors that are likely to benefit from the growing global armored fighting vehicles market are BAE Systems Plc BAESY, Northrop Grumman NOC and RTX Corp. RTX.

BAE Systems 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.

The company currently boasts a long-term earnings growth rate of 12.2%. The Zacks Consensus Estimate for BAESY’s 2024 sales indicates an improvement of 34.1% from the 2023 reported figure.

Northrop Grumman specializes in innovating low-cost, highly reliable and precise weapons and ammunition for battle tanks. Its Bushmaster Chain Gun has been protecting the United States and 65 allied countries across the globe from land, air and naval combat weapon platforms.

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

RTX is currently teaming up with a handful of companies like American Rheinmetall Vehicles as well as Textron, L3Harris Technologies and a few more, to meet the U.S. Army’s current requirement for a true, next-generation Optionally Manned Fighting Vehicle, namely the Lynx XM30 Combat Vehicle. This is a next-generation, tracked, armored fighting vehicle designed to address the critical challenges of the future battlefield.

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

Price Movement

In the past year, shares of General Dynamics have risen 44.3% against the industry’s 6% decline.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

The company 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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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

General Dynamics Corporation (GD) : Free Stock Analysis Report

Bae Systems PLC (BAESY) : Free Stock Analysis Report

RTX Corporation (RTX) : Free Stock Analysis Report

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