ATK's Share Price Up on New Deal


Alliant Techsystems Inc.’s (ATK) share price inched up 0.7% to $101.55 on Oct 14, 2013 from last Thursday’s closing price. This was primarily due to a positive impact from an award-winning contract. On Oct 10, 2013, Alliant received a contract, worth $102.4 million, from the U.S. Navy for the second full-rate production lot (“FRP 2”) of the Advanced Anti-Radiation Guided Missile (“AARGM”). With this deal, the company ended the contract drought after a period of almost two weeks.

Per the agreement, Alliant will provide the AARGM and Captive Air Training Missiles (“CATMs”) to the U.S. Navy and Italian Air Force, and will also supply the CATMs to the Royal Australian Air Force.

The AARGM is the upgraded version of the AGM-88 High-Speed Anti-Radiation Missile, used by the U.S. Navy. It is a medium range air-to-ground missile. The missile is 417 centimeter long with a diameter of 25.4 centimeter and weight of 361 kilogram. The AARGM has a wingspan of 112 centimeter.

The main function of the AARGM is to target enemy air defenses. The missile can destroy enemy air defenses and time-critical mobile targets.

AARGM is currently used by the U.S. Navy, U.S. Marine Corps and Italian Air Force on their FA-18C/D Hornet aircraft, FA-18 E/F Super Hornet aircraft, EA-18G Growler and Tornado ECR aircraft. The missile can also be deployed at the F-35 and EA-6B.

The missiles’ proven record and strong success rate enable Alliant to receive orders from the domestic and foreign defense authorities at regular intervals. On Sep 17, 2013, Alliant announced that it has delivered the 100th AARGM to the U.S. Navy.

Moreover, the Royal Australian Air Force will be utilizing CATMs for training purposes on its EA-18G Growler aircraft.

Alliant always tries to keep its commitments in terms of maintaining product and service quality along with delivery timing. This helps the company to win orders from different defense establishments as well as private organizations.

However, the U.S. defense budget cutbacks and the current volatility in the U.S. economy are our major cause of concern.

Alliant currently has a Zacks Rank #3 (Hold). However, other stocks from the industry that are presently performing well include B/E Aerospace Inc. (BEAV), Esterline Technologies Corp. (ESL) and Hexcel Corp. (HXL), each with a Zacks Rank #2 (Buy).

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