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BA & GD Win DoD Contracts

Zacks Equity Research

The Boeing Company (BA) and General Dynamics Corporation (GD) have won contracts from the U.S. Department of Defense (DoD). In this occasion, the DoD has awarded nine separate contractors worth $242.1 million.

Per the contracts, Boeing and General Dynamics along with other defense contractors will provide missiles support and environmental remediation services, and other kinds of naval as well as air-based technological assistance.

Boeing has received a modification contract, worth $15.9 million, for maintenance and technology restoration of the Combat Track II. The company will roll out the deliveries from Chantilly, Va. The contract is expected to be completed by Jun 25, 2016.

General Dynamics’ unit General Dynamics Electric Boat has received a cost-plus-fixed-fee modification contract, worth $7.6 million, to procure and construct a sea sentry mast and sensor. The contract is scheduled to be completed by Aug 2017.

A few days ago, Boeing has received a firm-fixed-price multi-year contract, with a maximum base value of $3.4 billion, to construct the remanufactured and new-build CH-47F cargo helicopters.

The defense operators’ performance depends on the orders coming from the national as well as international defense establishments. U.S. defense budget cuts due to the ongoing sequester could impact the performance of the defense operators.

We believe the defense companies’ effort toward wining more international orders will enable them to uphold a regular revenue flow. Some companies are also repositioning themselves in order to trim down operating expenses and streamline their operations. These steps will help the defense companies to tackle the ongoing headwinds.

Both Boeing Company and General Dynamics currently have a Zacks Rank #3 (Hold). Other stocks from the sector that are presently performing well include Erickson Air-Crane Inc. (EAC) and Astronics Corp. (ATRO) with a Zacks Rank #1 (Strong Buy).

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