Boeing (BA) Clinches Contract to Aid F/A-18E/F & E/A-18G Jets
The Boeing Company BA recently secured a contract involving the F/A-18E/F and E/A-18G jets. The award has been offered by the Naval Supply Systems Command Weapon Systems Support, Philadelphia, PA.
Details of the Deal
Valued at $34.7 million, the contract is expected to be completed by December 2026. Per the terms of the deal, Boeing will procure 57 processor as part of the Distributed Targeting Processor-Network system on the F/A-18E/F and E/A-18G aircraft.
Work related to this deal will be carried out in St. Louis, MO.
What’s Favoring Boeing?
Boeing, being one of the major players in the defense business, stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. Furthermore, the company's expertise lies in programs related to a wide variety of aircraft components, repairs and modification work.
Notably, its Defense, Space & Security segment’s portfolio has fixed-wing military aircraft, including F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker and T-7A Red Hawk. Given Boeing's combat-proven aerospace programs and associated services along with the rapidly growing need for military aircraft, in light of the enhancing geopolitical uncertainties worldwide, the company witnesses a solid inflow of orders from the Pentagon. The latest contract win is an example of that. Such order flows, in turn, should boost top-line growth for the company's defense business segment.
Growth Prospects
With rising security threats across the globe, emerging economies like the Asia Pacific, the Middle East and South America are spending a lot on enhancing their defense arsenals. Meanwhile, developed nations like the United States and Europe have already been leading the defense market. With the United States being the largest weapons exporter worldwide, the nation has been spending amply on defense products. Boeing, being the largest aircraft manufacturer in the United States, thus enjoys a dominant position in the combat aircraft market.
Per a Mordor Intelligence report, the global combat aircraft market is expected to witness a CAGR of 2.5% during the 2021-2026 time period, with North America constituting the largest share of this market. Such growth can be attributed to a rise in global threats and geopolitical instabilities and increased spending on defense. These projections should benefit Boeing along with other U.S.-based combat jet manufacturers like Northrop Grumman NOC, Lockheed Martin LMT and Textron TXT.
Lockheed’s Aeronautics business segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Its major programs include F-35, C-130 Hercules, F-16 Fighting Falcon and F-22 Raptor jets.
Lockheed Martin boasts a long-term earnings growth rate of 5.4%. The stock has gained 21.1% in the past year.
Since its inception, Northrop Grumman has been a pioneer in the development of manned aircraft for combat. Northrop Grumman also has a tradition of providing technological leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance, and aircraft self-protection systems that enable warfighters to accomplish missions anytime, anywhere and under any conditions.
Northrop Grumman boasts a long-term earnings growth rate of 2.2%. The stock has gained 38.7% in the past year.
Textron’s business unit, Textron Aviation Defense designs, builds and supports versatile and globally known military aircraft preferred for training and attack missions. Some of Textron’s renowned products include Beechcraft T-6C trainer and AT-6 Wolverine.
Textron boasts a long-term earnings growth rate of 12.5%. The Zacks Consensus Estimate for TXT’s 2022 sales implies an improvement of 6% from the 2021 reported figure.
Price Movement
Shares of Boeing have lost 29.6% in the past 12 months compared to the industry’s decline of 32.6%.
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Zacks Rank
Boeing currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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