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Textron (TXT) Wins Deal to Aid H-1 Light/Attack Helicopter

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Textron Inc.’s (TXT - Free Report) business segment, Bell, recently secured a contract for supporting the H-1 Light/Attack Helicopter. The award has been offered by the Naval Air Warfare Center Weapons Division, China Lake, CA.

Details of the Deal

Valued at $228.2 million, the contract is expected to be completed by September 2027. Per the deal, Textron will provide the H-1 Light/Attack helicopter with new and modified capabilities through System Configuration Sets.

In particular, as part of this contract, Textron will work on the airframe, aircraft wiring interface terminals, flight controls, and weapon systems interfaces, as well as research alternatives.  

The company will also offer all efforts required to accomplish an analysis of alternatives, system design, integration, testing, rapid response activities and system capability improvements.

The majority of the work related to this deal will be carried out in Fort Worth, TX.

What’s Favoring Textron?

Countries across the globe have been reinforcing their military resources due to intense geopolitical tensions and amplified terrorist threats.

Among other combat arsenals and weaponry, military helicopters have also been gaining importance owing to advancements and integration of new tactical and logistical features. This has provided ample opportunities for Textron to win production and modification contracts for helicopters in recent times. The latest contract is an example of that. Such contract wins are likely to boost revenues from the Bell unit.

Growth Prospects

The bumped-up defense budget of many nations, as a repercussion of the Russian-Ukraine war, has resulted in a surge in demand for military arms and ammunitions of late. This may have led to increased defense spending on military helicopters as well.

Per a report from Mordor Intelligence, the military rotorcraft market is likely to expand at a CAGR of more than 4% during the 2022-2027 period. This is likely to benefit Textron, with its Bell segment consistently innovating combat helicopters as well as upgrading the existing models to expand in the military rotorcraft market. In March 2022, Bell submitted its final Future Long Range Assault Aircraft (FLRAA) proposal revision to the U.S. Army and expects to receive the contract in October 2022.

The growth prospects of the military rotorcraft market should also benefit other defense primes like Lockheed Martin (LMT - Free Report) , Boeing (BA - Free Report) and Northrop Grumman (NOC - Free Report) , which have already established their position in the military helicopter arena.

Lockheed Martin’s Sikorsky business segment provides military and rotary-wing aircraft for U.S. armed forces along with military services and commercial operators in 40 nations. Some of its product ranges include CH-53K, S-92, UH-60 Black Hawk, etc.

Lockheed Martin’s long-term earnings growth rate is pegged at 5.5%. LMT shares have risen 19.9% in the past year.

The long-term earnings growth rate of Lockheed is pegged at 5.4%. Shares of LMT have risen 23.9% in the past year.

Boeing’s portfolio of helicopters comprises the AH-6 Little Bird, AH-64 Apache, V-22 Osprey and H-47 Chinook aircraft and in-development entrants, which include the MH-139A Grey Wolf and DEFIANT X. Its military rotorcraft are currently used by the U.S. Army, Navy, Marines and Air Force as well as allied defense forces in over 20 countries across the globe.

The Zacks Consensus estimate for Boeing’s 2022 earnings reflects an improvement of 14.8% from 2021 reported figure. BA’s shares have moved up 5.9% in the three months.

Northrop Grumman’s Fire Scout is a combat-proven, autonomous helicopter system providing real-time intelligence, surveillance, reconnaissance and target-acquisition, laser designation and battle management for tactical users without relying on manned aircraft or space-based assets. It’s available in two variants – MQ-8B Fire Scout and MQ-8C Fire Scout.

Northrop Grumman has a long-term earnings growth rate of 2.2%. NOC’s shares have rallied 41.4% in the past year.

Price Performance

Shares of Textron have rallied 7.4% in the past three months compared with the industry’s rise of 2.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank

Textron carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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