Boeing Clinches $12.6M Deal to Support T-45 Aircraft Program

The Boeing Co. BA received a $12.64-million delivery order for the production and delivery of 39 retrofit kits for the T-45 aircraft Service Life Extension program. Per the terms of the deal, the company will supply
support equipment and tools for the program.

Details of the Deal

Boeing will carry out retrofit engineering and logistics to support the installation of associated government technical directives. The contract was awarded by the Naval Air Warfare Center Training Systems Division,
Orlando, FL.

Work related to the deal will be majorly carried out in St. Louis, MO, and is scheduled to be over by September 2019. Boeing will also utilize fiscal 2017 aircraft procurement (Navy) fund to complete the task.
    
A Brief Note on T-45 Aircraft

Boeing’s T-45 Goshawk aircraft is the naval version of the land-based British Aerospace Hawk. The aircraft is powered by a British/French Rolls-Royce Turbomeca F405-RR-401 turbofan engine delivering up to
5,527 lbs of thrust with a maximum speed listed at 645 miles per hour. Service ceiling is approximately 42,500 feet with a rate-of-climb nearing 8,000 feet per minute.

Our View

Boeing, being one of the largest aerospace and defense contractors, is a market leader in terms of revenues, orders and deliveries. The company enjoys a solid inflow of contracts from both the Pentagon as well
as foreign allies, courtesy of its varied defense equipment.

In the defense industry, following the $700-billion fiscal 2018 defense bill, Boeing has been witnessing a solid inflow of contracts. One such contract is the $279-million deal for delivering the first KC-46 tanker and
logistics support to the Japan Air Self-Defense Force (JASDF).

We believe that the aforementioned contract along with several other deals reflects increased attention of the U.S. government on strengthening its defense front and opting for defense giants like Boeing as
appropriate contractors.

During the third-quarter earnings call, Boeing raised its 2017 sales outlook citing higher sales volume as the primary reason. Given the slew of contracts that the company has been winning, including the recent
one, we may expect Boeing to continue delivering impressive sales growth in the days ahead.

Price Movement

Boeing’s stock has rallied about 121.7% in a year, compared with the broader industry’s gain of 56.9%. The outperformance was primarily led by significant demand for its military jets along with robust worldwide
demand for its commercial aircraft.

 



 

Zacks Rank & Key Picks

Boeing carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same space are Aerojet Rocketdyne Holdings, Inc. AJRD, Northrop Grumman Corporation NOC and Spirit Aerosystems Holdings, Inc. SPR. While Aerojet Rocketdyne and
Northrop Grumman sport a Zacks Rank #1 (Strong Buy), Spirit Aerosystems carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne posted an average positive earnings surprise of 19.27% over the last four quarters. The Zacks Consensus Estimate for 2018 earnings moved up 20 cents over the past 90 days.

Northrop Grumman posted an average positive earnings surprise of 17.24% in the past four quarters. The Zacks Consensus Estimate for 2018 earnings rose by 47 cents over the last 90 days.

Spirit Aerosystems has an average positive earnings surprise of 4.52% for the past four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 21 cents in the last 90 days.

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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
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