ATK Shares Buoyed by Contract Win

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Alliant Techsystems Inc. (ATK) jumped 2.1% to $97.20, thanks to the $17.1 million deal from the U.S. Department of Defense (DoD) on Sep 23. With this deal, the company ended the contract drought after an approximate period of three weeks.

Per the contract, Alliant’s unit Federal Cartridge Company will provide .40-caliber ball and jacketed hollow point ammunition to the Naval Criminal Investigative Services and the U.S. Coast Guard. The naval departments will utilize these ammunitions for training exercises and law enforcement activities.

Federal Cartridge Company will provide the services from its facilities in Anoka, Minn. The contract is expected to be completed by Sep 2018.

Alliant tries to keep its commitments in terms of maintaining product and service standards along with delivery timing. This helps the company to win orders from different government establishments as well as private organizations at regular intervals.

In Aug 2013, Alliant received a firm-fixed-price, option-eligible, non-multi-year contract from the U.S. DoD for low rate initial production of the XM1156 Precision Guidance kit. The contract came under the U.S. DoD’s foreign military sales contract for providing assistance to Australia.

We appreciate Alliant’s continuous effort towards introducing new technological applications and improving existing processes in military and aerospace programs. During first quarter fiscal 2014, the company invested $10.4 million for the research and development activities.

Despite the pressure on defense companies from U.S. defense budget cuts, Alliant has been able to surpass estimates and post favorable results in the past couple of quarters. The favorable results were primarily driven by a number of new contracts from the U.S. and international defense departments on the back of technological development.

Alliant currently has a Zacks Rank #1 (Strong Buy). Other stocks from the industry that are also presently performing well include Elbit Systems Ltd. (ESLT) with a Zacks Rank #1 (Strong Buy), and B/E Aerospace Inc. (BEAV) and Curtiss-Wright Corp. (CW), each with a Zacks Rank #2 (Buy).

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