Boeing (BA) Wins Navy Contract to Support P-8A Aircraft
The Boeing Company BA has recently clinched a modification contract involving P-8A aircraft. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $50.8 million, the contract is expected to be completed by July 2026. Per the terms of the deal, Boeing will procure eight P-8A Increment 3 retrofit A-kits to include associated special tooling. This modification is aimed at supporting the Navy’s anti-submarine warfare capabilities upgrades.
Majority of the work related to the contract will be carried out in Jacksonville, FL.
What’s Favoring Boeing?
Boeing, 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 a wide variety of aircraft components, repairs and modification-related programs.
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. Boeing's combat-proven aerospace programs and associated services, along with the rapidly growing need for military aircraft due to heightened geopolitical uncertainties worldwide, have resulted in a solid inflow of orders from the Pentagon. The latest contract win is an example of that. Such order flows, in turn, should boost the defense business segment’s top line.
Growth Prospects
With rising security threats across the globe, emerging economies like South America, the Asia Pacific and the Middle East are spending a lot on enhancing their defense arsenals. Meanwhile, other nations like Europe and the United States have already been leading the defense market. With the United States being the largest worldwide weapons exporter, the nation has been spending amply on defense products. Boeing, 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 2021-2026, 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 defense spending. These projections should benefit Boeing, along with other U.S.-based combat jet manufacturers like Northrop Grumman NOC, Lockheed Martin LMT and Textron TXT.
Since its inception, Northrop Grumman has been a pioneer in the development of manned combat aircraft. 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 and anywhere.
Northrop Grumman has a long-term earnings growth rate of 3.5%. The Zacks Consensus Estimate for NOC’s 2023 sales implies a 4.6% improvement from the year-ago reported figure.
Lockheed’s Aeronautics business segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, 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 6.9%. The stock boasts a four-quarter average earnings surprise of 6.86%.
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 11.2%. The Zacks Consensus Estimate for TXT’s 2023 sales implies a 8.1% improvement from the year-ago reported figure.
Price Movement
Shares of Boeing have gained 3.4% in the past year against the industry’s 14.4% decline.
Image Source: Zacks Investment Research
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Boeing Company (BA) : Free Stock Analysis Report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Textron Inc. (TXT) : Free Stock Analysis Report
