Boeing (BA) Clinches $10.2M Delivery Order From Air Force

The Boeing Co. (NYSE:BA) announced that it has received $10.2 million delivery order from the Air Force Life Cycle Management Center, Eglin Air Force Base, FL.

Order Detail

This contract is for providing the joint direct attack munition (JDAM) high compact telemetry modules. Per the terms, Boeing needs to deliver flight test instrumentation hardware to the Air Force. The hardware will be utilized for gathering real-time JDAM weapon data during testing. The company expects to complete the work by Apr 2019 at its San Diego, CA facility.

This award includes foreign military sales (FMS) to Japan, The Republic of Korea, Israel, and Singapore.

Fiscal 2015, 2016 and 2017 procurement funds; fiscal 2016 research and development funds; fiscal 2017 operations and maintenance funds; and FMS funds will be utilized to finish the order.

A Brief Note on JDAM

The JDAM is a guidance tail kit that converts existing unguided free-fall bombs into accurate, adverse weather "smart" munitions. With the addition of a new tail section that contains an inertial navigational and a global positioning system guidance control unit, JDAM improves the accuracy of unguided, general purpose bombs in any weather condition. Once released from the aircraft, the JDAM autonomously navigates to the designated target coordinates.

Why Boeing?

As one of the largest aerospace and defense contractors, Boeing is a market leader in terms of revenue, orders and deliveries. The company not only receives orders from within U.S. but has been enjoying enormous demands from other parts of the world as well for its varied defense equipments.

In this regard, the company has lately won a modification contract worth $48.9 million to supply 54 F/A-18 retrofit kits to support engineering change proposal 6213R2, “Trailing Edge Flap Retrofit Redesign”. It was awarded by the Naval Air Systems Command, Patuxent River, MD. (Read more: Boeing Wins $49M Navy Deal for F/A-18 Aircraft Support)

Moreover, while big defense players like Boeing are already gaining accelerated traction under the rule of President Trump, the proposed base budget appropriations of Mar 2017, added further impetus to the company’s growth trajectory. This appropriation sought to invest amn additional $30 billion for the U.S. defense. We believe that the aforementioned contract reflects increased attention of the U.S. government toward strengthening its defense front and choosing defense giants like Boeing as appropriate contractors. Such contracts are expected to boost the company’s revenue growth.

Price Movement

Shares of the company have rallied 56.6% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 28.1%.

This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.

Zacks Rank and other Stock to Consider

Boeing currently carries a Zacks Rank #3 (Hold). Some better ranked stocks in the same space are Northrop Grumman Corporation (NYSE:NOC) , General Dynamics Corporation (NYSE:GD) and Leidos Holdings, Inc. (NYSE:LDOS) which carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northrop Grumman Corporation delivered a positive earnings surprise of 25.17% in the first quarter 2017. The company’s 2017 Zacks Consensus Estimates moved up by 4.7% to $12.37 per share in the last 90 days.

General Dynamics Corporation delivered a positive earnings surprise of 6.9% in the first quarter 2017. The company’s 2017 Zacks Consensus Estimates moved up by 0.8% to $9.79 per share in the last 90 days.

Leidos Holdings Corporation delivered a positive earnings surprise of 12.82% in the first quarter 2017. The company’s 2017 Zacks Consensus Estimates moved up by 2.2% to $3.30 per share in the last 90 days.

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