General Dynamics Wins a $199M Contract to Support USS America Warship

General Dynamics Corp.’s GD business unit, NASSCO, recently clinched a contract for the maintenance, modernization and repair of USS America (LHA 6) warship. The award has been offered by the Naval Sea Systems Command, Washington, D.C.

Valued at $199 million, this contract includes options that, if exercised, will bring the total contract value to $209.2 million. The contract is expected to be completed by July 2027. The work related to this deal will be carried out in San Diego, CA.

What’s Favoring GD Stock?

Rising geopolitical tensions and the resultant demand growth for maritime security are driving increased global investment in advanced naval vessels. This surge in demand has benefited shipbuilders like General Dynamics, which continues to secure strong contract inflows for its proven warships, the latest being a key example.

In particular, its NASSCO unit specializes in building auxiliary and support ships for the U.S. Navy and offers repair services worldwide, with major operations in San Diego, Norfolk, Mayport and Bremerton, supporting both military and commercial markets.

What Lies Ahead for GD Stock?

The rising demand for efficient naval security systems is steadily driving growth in the naval ship market. In line with this, the Mordor Intelligence firm projects a compound annual growth rate of 6.5% for the global naval combat vessels market during the 2025-2030 period.

This growth projection presents a significant revenue generation prospect for General Dynamics, a leading contractor for navy ships. Notably, its Marine Systems segment excels in designing and building surface combatant and auxiliary ships for the U.S. Navy, while also offering modernization and lifecycle extension services. Its unparalleled marine engineering expertise ensures the development of advanced naval capabilities. Such proficiency positions GD to secure more contracts like the latest one, which, in turn, should boost its revenues in the future.

Peer Opportunities

Other defense companies that are likely to enjoy the perks of the expanding naval combat vessels 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 10.5%. 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%. The Zacks Consensus Estimate for HII’s 2025 sales indicates an increase of 3.3% 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 11.9%. The Zacks Consensus Estimate for BAE Systems’ 2025 sales indicates growth of 62.6% from the 2024 level.

Price Performance

Shares of General Dynamics have risen 8.8% in the past three months compared with the industry’s 8% growth.

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

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