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Raytheon Wins $26M FMS Deal for Field Artillery C3 & AFATDS

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Raytheon Company RTN recently secured a $26-million deal for delivering field artillery C3 and Advanced Field Artillery Tactical Data System (AFATDS). The company acquired the deal under the Foreign Military Sales (FMS) program and will be delivering these to Poland and Romania.

Work related to the deal will be executed in Woburn, MA, and is expected to be completed by Dec 19, 2021. Raytheon will also utilize fiscal 2020 FMS funds for completing the task. The contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, MD.

Importance of AFATDS

The AFATDS is the Fire Support Command and Control (C2) system, which provides automated support for planning, coordinating, controlling and executing fires and effects. The system prioritizes targets received from various sensors and performs attack analysis using situational data combined with the commander's guidance.

The system provides complete flexibility to manage attacks on preplanned and time-sensitive targets. It supports weapon systems such as mortars, field artillery cannons, rockets, close air support, attack helicopters and Naval Surface Fire Support (NSFS) systems. AFATDS is installed in the U.S. Navy LHA/LHD Class big deck amphibious ships to support Expeditionary Strike Groups (ESGs) for amphibious operations.

What Favors Raytheon?

With the increase in cyber attacks and terror threats worldwide, many nations across the globe have strongly shifted their focus on elevating the quality of data and radar systems. Raytheon being the producer of a wide range of next-generation data systems benefits heavily from such rising demands. This also helps the company solidify its position in the global radar systems market. Hence, Raytheon continues to make substantial investments in next-generation radars and data system technologies.

Nations like Poland and Romania have been two of the major European customers of Raytheon in recent times. Both countries have purchased Patriot Air and Missile Defense Systems from Raytheon for defense against ballistic and cruise missiles. Now, with the inclusion of AFATDS in the Polish and Romanian army, Raytheon’s hold in the European military market will become significantly stronger, which in turn will drive its sales.

Price Movement

In the past six months, shares of Raytheon have gained 24.3% compared with the industry’s 14.4% growth.

Zacks Rank & Key Picks

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

A few better-ranked stocks in the same space are Ducommun Incorporated DCO, CAE Inc. CAE and Teledyne Technologies Inc. TDY. While Ducommun sports a Zacks Rank #1 (Strong Buy), CAE Inc and Teledyne carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ducommun delivered a positive earnings surprise of 14.75% in the last four quarters. Its Zacks Consensus Estimate for 2019 earnings improved 6.3% over the past 90 days.

CAE Inc. delivered a positive earnings surprise of 10.53% in the last reported quarter. It has a solid long-term earnings growth rate of 10%.

Teledyne delivered average four-quarter earnings beat of 10.13%. It currently boasts a solid long-term earnings growth rate of 7.5%.

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