Harris Wins Army Contract Extension

Harris Corporation ( HRS - Analyst Report ) , a leader in the public safety and professional communications market, has won a multi-million contract extension from the U.S. Army Communications Electronics Command. The ceiling value of the contract – 2011 IDIQ (Indefinite Delivery Indefinite Quantity) – has been increased by $500 million.

The contract is part of the U.S. government’s Foreign Military Sales Program, through which it acts as an intermediary in supplying U.S. defence equipment to its allied countries thus encouraging coalition and cooperation between them in the process.

The contract enables the U.S. government to acquire a wide range of radio products including Falcon III RF-7800S Secure Personal radios, RF-7800M Multiband Networking Radio and RF-7800H High Frequency for its partner countries. These radio products will aid the U.S. government and its allied members in maintaining border security and fight against terrorism.

Harris RF Communications segment provides secure radio communications and embedded high-grade encryption solutions for military, government and commercial organizations. At the end of the previous quarter, order backlog in the segment came in at $1.14 billion including $561 million in the Tactical radio Communication division.

Harris’s communication product is very popular among the defence sector of various countries and of late, the company has won numerous orders for its Tactical III radio products both from domestic and international customers.

We believe that the contract extension establishes the faith that the U.S. Department of Defence has on Harris’ products, which already satisfies the requirements of U.S. military’s Joint Tactical Radio System (JTRS) requirements. The contract will significantly boost the company’s top line going forward.

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

Other Stocks to Consider

Some other stocks in the defence sector and public safety are General Dynamics Corp. ( GD - Analyst Report ) , The Boeing Co. ( BA - Analyst Report ) and Motorola Solutions Inc. ( MSI - Analyst Report ) . While net earnings of General Dynamics missed the Zacks Consensus Estimate in the recent quarter, Motorola Solutions and Boeing have handily beaten the Zacks Consensus Estimates. Boeing currently has a Zacks Rank #2 (Buy), while both Motorola Solutions and General Dynamics carry Zacks Rank #3 (Hold).