Back to top

Image: Bigstock

Boeing Wins $308M Deal to Support F/A-18 Jet Program

Read MoreHide Full Article

The Boeing Company (BA - Free Report) recently secured a $307.5 million contract for offering integrated product support in relation to F/A-18 jets’ A-D and E-G versions. Work related to the deal is expected to be over by Dec 31, 2023.

The contract was awarded by the Defense Logistics Agency Aviation, Philadelphia, PA. The agreement involves foreign military sales to Australia, Canada, Spain, Finland, Switzerland, Kuwait, and Malaysia. Boeing will conduct the task in the states of Missouri and Florida.

What Favors Boeing?

As Boeing’s key forte lies in manufacturing combat-proven aircraft, it has continued to secure an increased number of contracts from the Pentagon owing to the company’s proven expertise in aerospace programs. Subsequently, revenues of its Defense, Space & Security (BDS) segment witnessed a 13% rise year over year to $5.73 billion in third-quarter 2018. We expect Boeing’s BDS segment to deliver such solid performance in upcoming quarters as well, courtesy of the latest contract win and a handful of other notable deals.

In this context, it is imperative to mention that FMS contracts have played a key role in driving Boeing’s operational performance. Evidently, the company’s backlog at BDS stood at $58 billion, 31% of which comprised orders from international clients. We expect FMS deals like the latest one to keep bolstering the company’s backlog, thereby providing a boost to its revenue growth.

Fiscal 2019 Budget

The fiscal 2019 defense budget, approved this June, provisioned major war fighting investments worth $21.7 billion for aircraft that further included an investment plan of $2 billion for procuring 24 F/A-18 Jets. Such inclusions reflect solid growth prospects for Boeing's BDS segment, which in turn, are likely to boost the company’s profit margin.

Price Movement    

In a year’s time, Boeing’s stock has gained 6.1% against the industry’s 6.5% decline. This outperformance can be primarily attributed to robust worldwide demand for its commercial aircraft and military jets.

Zacks Rank & Other Stocks to Consider

Boeing currently carries a Zacks Rank #2 (Buy). A few other top-ranked companies in the same sector include Aerojet Rocketdyne Holdings , Teledyne Technologies Incorporated (TDY - Free Report) and Lockheed Martin Corp. (LMT - Free Report) . While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Lockheed Martin carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne delivered average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 43.3% north to $1.82 over the past 90 days.

Teledyne Technologies delivered average positive earnings surprise of 12.92% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 6% to $8.75 over the past 90 days.

Lockheed Martin delivered average positive earnings surprise of 13.92% in the preceding four quarters. The Zacks Consensus Estimate for 2018 earnings has climbed 3% to $17.51 over the past 90 days.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in