Rockwell Collins Wins DoD Contract

Zacks

Rockwell Collins Inc. (COL) won a $10.4 million contract from the U.S. Department of Defense (DoD) for the procurement of a minimum 160 each to a maximum 1152 display units for U.S. Army’s Blackhawk weapon system. The contracting activity is the U.S. Army Contracting Command – Redstone Arsenal (Aviation), Redstone Arsenal, AL.

The contract’s performance location and funding will depend on each order. The Black Hawk helicopters are fitted with all the requisite next generation technological features like Global Positioning System, fiberglass four-blade main rotor, and General Electric Company’s (GE) T700-GE-701C 1890 shp turboshaft engines. The helicopter offers an array of services to the military which includes transporting troops and supplies, search and rescue missions as well as medical evacuations.

The budget austerity in the U.S. is taking a toll on the defense sector as contract values have been low compared to the prior years. Rockwell Collins too has been hit by the ongoing sequestration.

In 2013, the company’s most notable win was the $166.3 million joint contract with Britain’s BAE System plc. for providing systems engineering and integration support to the multifunctional information distribution system ("MIDS") low volume terminal and the MIDS joint tactical radio systems terminal.

However, Rockwell Collins announced its intention to shift more to the commercial business to weather the weak defense environment. This explains the acquisition of privately-held ARINC Inc. which turned out to be one of the striking buyouts of 2013. The combination of Rockwell Collins’ know-how in avionics and cabin technologies, and ARINC’s information and communications products, will certainly spur the former’s future revenue trajectory.

In addition, the reinstatement of the Federal Research and Development Tax Credit will boost Rockwell Collins’ innovation competencies. It presently maintains a Zacks Rank #3 (Hold).

Other defense counterparts better placed in the sector are Zacks Ranked #2 (Buy) B/E Aerospace Inc. (BEAV) and Curtiss-Wright Corp. (CW). Rockwell Collins at the moment has a market capitalization of $9.54 billion.

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