General Dynamics Secures a Contract for Upgrading Navy Ships

General Dynamics Corporation’s (GD) business unit, Mission Systems, recently clinched a contract to produce and install advanced electronic systems for U.S. Navy ships. The work includes developing new software and hardware, building the systems and helping to install them on vessels. The award has been offered by the Naval Sea Systems Command, Washington, D.C.

Valued at $15.3 million, the contract is expected to be completed by August 2026. This contract includes options which, if exercised, would raise the contract value to $91.1 million and extend the completion date through August 2030. The majority of the work related to this deal will be executed in Manassas, VA; Groton, CT; and Las Vegas, NV.

GD’s Growth Prospects

Rising complexity in naval operations, growing demand for advanced systems integration and increasing investment in shipset production and platform installations are driving growth in the naval shipbuilding market. This surge is fueled by the need for modernized fleet with enhanced communication, electronics and mission-critical systems.

This is likely to have prompted the Fortune Business Insights firm to forecast a compound annual growth rate of 5.6% for the global naval vessels and surface combatants market during the 2023–2030 time period.

This growth is likely to benefit General Dynamics, a prominent contractor in the shipbuilding market. Its Mission Systems division is responsible for providing software, hardware and platform integration support to the U.S. Navy. The division also plays a key role in designing and installing advanced systems that enhance the operational capabilities of naval vessels, positioning the company to capture a significant share of this expanding market.

Opportunities for Other Defense Stocks

Other defense companies that are likely to enjoy the perks of the expanding global shipbuilding market have been discussed below:

Lockheed Martin (LMT): The company manufactures Littoral Combat Ships (LCS). Its freedom-variant LCS is a resilient, flexible warship designed to serve the evolving missions of the U.S. Navy. Its speed, strength and versatility make it a critical tool in crucial missions.

Lockheed’s long-term (three to five years) earnings growth rate is 10.3%. The Zacks Consensus Estimate for LMT’s 2025 sales implies an improvement of 4.6% from the 2024 figure.

Huntington Ingalls Industries (HII): Its business segment designs and constructs non-nuclear ships for the U.S. Navy and the U.S. Coast Guard, including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters.

Huntington’s long-term earnings growth rate is 11.6%. The Zacks Consensus Estimate for HII’s 2025 sales indicates an increase of 3.7% from the year-earlier level.

BAE Systems (BAESY): It designs, builds, commissions, repairs and supports a full range of complex naval ships, from offshore patrol vessels to aircraft carriers. Its Queen Elizabeth Class Aircraft Carriers are the largest warships ever constructed in the United Kingdom.

BAESY boasts a long-term earnings growth rate of 14.4%. The Zacks Consensus Estimate for BAE Systems’ 2025 sales indicates growth of 63.4% from the 2024 level.

GD Stock Price Movement

Shares of General Dynamics have gained 6.6% in the past month compared with the industry’s 2.5% growth.

GD’s Zacks Rank

GD 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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This article originally published on Zacks Investment Research (zacks.com).

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