Raytheon Company ( RTX Quick Quote RTX - Free Report) recently won a modification contract to procure Stinger missiles and associated equipment. The U.S. Army Contracting Command, Redstone Arsenal, AL has offered the award.
Valued at $62.8 million, the contract is expected to be completed by Jun 30, 2022.
Significance of Stinger Missiles
The combat-proven Stinger missile is a lightweight, self-contained air defense system that can be rapidly deployed by ground troops. Its supersonic speed, agility and highly accurate guidance and control system give the weapon an operational edge against cruise missiles and all classes of aircraft.
The missile has been enjoying strong demand amid the ongoing war between Ukraine and Russia, in which the former used the missile to stop the Russian attacks. Almost 1400 Stinger missiles were sent to Ukraine to defend the country from the Russian assault, which led to a depletion of the stock for the U.S. Army.
Due to its remarkable features that can effectively assist in military operations, the Stinger missile has a strong footprint globally. Moreover, the recent performance of the missile in repelling Russian attacks significantly bolstered its demand from the European countries as well. To this end, Raytheon Technologies may continue to witness a steady inflow of orders involving the Stinger missile. The latest contract win is a testament to that. Such contract wins, in turn, are expected to boost RTX’s missiles and defense business unit revenues in the coming days.
Prospects for Raytheon Technologies
The recent turbulence between Russia and Ukraine has led nations to strengthen their warfare capabilities to deter any warfare-like situation and repel any sudden assault. In this context, the demand for missiles may increase manifold as these have the immense destructive power to support military operations efficiently.
Per a report from Markets and Markets, the global rockets and missile market is anticipated to witness a CAGR of 4.8% during the 2021-2026 period.
Raytheon Technologies’ Missiles & Defense business unit, a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems, should thus witness strong growth acceleration, which will be instrumental to its overall growth trajectory.
Benefits for Peers
Considering the expanding size of the market, here are a few defense behemoths that stand to benefit from the rewarding missile market:
Northrop Grumman ( NOC Quick Quote NOC - Free Report) designs and produces missile products, including advanced high-speed propulsion systems, fuses, warheads and controls for air, sea and land-based systems. Its missile defense program includes AGM-88E advanced anti-radiation guided missiles, the Ground Based Strategic Deterrent weapon system and rocket propulsion systems.
Northrop Grumman has a long-term earnings growth rate of 6.1%. The Zacks Consensus Estimate for NOC’s 2022 sales implies a 2.6% improvement from the 2021 reported figure.
Lockheed Martin’s ( LMT Quick Quote LMT - Free Report) Missiles and Fire Control business unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile and the Terminal High Altitude Area Defense missile.
Lockheed Martin’s long-term earnings growth rate is pegged at 5.7%. Shares of LMT have returned 17.9% value to investors in the past year.
General Dynamics’ ( GD Quick Quote GD - Free Report) Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.
General Dynamics boasts a long-term earnings growth rate of 9.8%. The Zacks Consensus Estimate for GD’s 2022 sales implies a 2.7% improvement from the 2021 reported figure.
In the past year, shares of Raytheon Technologies have rallied 11.9% against the
industry’s decline of 2.3%. Image Source: Zacks Investment Research Zacks Rank
Raytheon Technologies currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.