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Boeing Wins $14.3M FMS Contract to Supply Chinook Parts

Zacks Equity Research

The Boeing Company BA announced that it has received a Foreign Military Sales (FMS) contract worth nearly $14.3 million to supply new parts of CH-47F Chinook helicopters to Netherlands and Turkey.  The new parts will increase the operational life and efficiency of the Chinook helicopters.

The majority of the work will be done in the company’s facility in Ridley Park, PA. The deal is estimated to be completed by Dec 31, 2020.

Earlier in May 2017, Boeing received a $541.1 million FMS contract from Netherlands to build 15 CH-47F cargo helicopters. Chinook helicopters are utilized by the Netherlands government for both defense and humanitarian purposes.

Foreign Military Sales
The FMS contracts supported the large U.S. based defense companies when there was a marginal drop in domestic orders.  In Nov 2016, the Defense Security Cooperation Agency (DSCA) announced FMS of $33.6 billion for fiscal 2016.

In May 2017, President Trump signed a $110 billion defense package with Saudi Arabia, which will span over seven decades. The deal surpassed the $38 billion U.S.-Israel defense pact that was inked in Sep 2016 for a total of 10 years.

Thanks to a wide range of product offerings, Boeing and other U.S. defense operators continue to receive defense contracts from the allied nations.

In a recent development, the U.S. has agreed to sell its Patriot missile defense system to Poland, which will benefit manufacturer Raytheon Company RTN. The potential value of the deal could reach around $8 billion.

Price Movement

Shares of Boeing have gained 58.7% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 28.4%.

Boeing’s strong balance sheet and cash flows provide financial flexibility while a strong backlog of defense and commercial products provides visibility of its earnings.

Zacks Rank and Stocks to Consider

Boeing currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Curtiss-Wright Corporation CW and Heico Corporation HEI. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Curtiss-Wright Corporation delivered average positive earnings surprise of 5.11% in the last four quarters. Its 2017 earnings estimates moved up 1.36% to $4.48 over the last 90 days.

Heico Corporation delivered average positive earnings surprise of 5.76% in the last four quarters. Its fiscal 2017 earnings estimates moved up 1.47% to $2.07 over the last 90 days.

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Boeing Company (The) (BA) : Free Stock Analysis Report
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