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Boeing Wins Deal to Offer Engineering Service to Bomber Jets

Zacks Equity Research

The Boeing Company BA recently secured a $400-million modification contract for providing recurring and non-recurring engineering services to B-1 and B-52 aircraft. The contract was awarded by Air Force Life Cycle Management, Tinker Air Force Base, Oklahoma City, OK.

Work related to the deal will be performed at Tinker Air Force Base, OK, Edwards Air Force Base, CA, Barksdale Air Force Base, LA and Oklahoma City, OK. The entire task is expected to get completed by Dec 31, 2020.
With the recent modification, the total cumulative value of the contract reached $800 million.

Advantages of Boeing’s B-1 & B-52 Bomber

Boeing's B-1 is a long-range, multi-mission, supersonic conventional bomber, which is equipped to carry eight air-launched cruise missiles or 24 SRAMs alongside carrying up to 24 nuclear bombs or 84 500-pound conventional bombs.

The Boeing B-52 primarily provides the U.S. military with immediate nuclear and conventional global strike capabilities. Due to its high mission-capable rate, large payload, long range, persistence and ability to employ both nuclear and conventional precision standoff weapons, the B-52 continues to be a critical contributor to the U.S. National Security Strategy.

What Favors Boeing?

With manufacturing of combat-proven aircraft being Boeing’s forte, the company secures large number of contracts from the Pentagon for long. The recent contract win is one such example. Also, in recent times, Boeing’s various aerospace programs along with its vast portfolio of associated services are witnessing rapid rise in demand due to geopolitical uncertainties worldwide. Such growing demand bodes well for the company’s growth going ahead.

Furthermore, the U.S. Senate has approved the fiscal 2020 defense budget, provisioning major war fighting investments worth $57.7 billion for aircraft. Such proposed inclusions indicate solid growth prospects for Boeing's Defense, Space & Security segment, which, in turn, are likely to boost profit margin.

This, inevitably, will increase demand for the company’s various technical services, pivotal for upgrading military aircraft.

Price Performance

Shares of Boeing have gained about 17.4% in a year compared with the industry’s rally of 36.1%.

Zacks Rank & Key Picks

Boeing currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same space are Air Industries Group AIRI, L3Harris Technology Inc LHX and Leidos Holdings, Inc. LDOS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Air Industries delivered average four-quarter earnings beat of 52.78%. Its Zacks Consensus Estimate for earnings of 5 cents for 2020 improved by 12 cents in last 60 days.

L3Harris’ long-term growth estimate currently stands at 8%. The company delivered average positive earnings surprise of 5.02% in the last four quarters.

Leidos Holdings delivered average four-quarter earnings beat of 8.93%. It currently has a solid long-term earnings growth rate of 7.5%.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

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Click to get this free report Air Industries Group (AIRI) : Free Stock Analysis Report Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report The Boeing Company (BA) : Free Stock Analysis Report L3Harris Technologies Inc (LHX) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research