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Orbital ATK (OA) to Team Up with NASA for CIRAS Program

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Dulles, VA-based Orbital ATK announced that it has inkeda public-private partnership with the NASA’s Space Technology Mission Directorate (STMD) to launch a Commercial Infrastructure for Robotic Assembly and Services (CIRAS) in space.

Details of the Partnership

The chief contractor of the program will beOrbital ATK, providing support through its wholly owned subsidiary, Space Logistics, LLC. It will be supported by the NASA’s Langley Research Center, Glenn Research Center and the U.S. Naval Research Laboratory.

The CIRAS program will develop key technologies for in-orbit manufacturing and assembly of large space structures to help the agency meet its goals for robotic and human exploration of the solar system.

The CIRAS program’s first phase began in Sep 2016 and will continue through two years.



A Brief Note on CIRAS

CIRAS is one of the three programs awarded under the NASA STMD’s "Utilizing Public-Private Partnerships to Advance Tipping Point Technologies” solicitation.

CIRAS has a goal of developing technologies and capabilities for future NASA missions and commercial applications.

For this program, Orbital ATK will create a team that will work on developing technologies for robotic assembly of large space structures, like solar-powered structures, for transport or communications or even next-generation telescopes.

The technology will be able to connect or disconnect joints on a structure and address precision measuring and alignment through a 15-meter robotic arm and a precision robot.

The team will also come up the technology needed to conduct in-orbit modular assembly of structures, thereby simplifying the design of the spacecraft and reducing cost.

Price Movement

Orbital ATK has largely underperformed the Zacks Categorized Aerospace/Defense Equipment industry. The company’s current rate of return is 1.2%, compared to the industry average of 14.9% over the last 12months.

Note that Orbital ATK received a contract for the production of U.S. military small-caliber ammunition worth $2.3 billion, which was awarded in 2012, had been incurring losses since 2014. An error in accounting was located after intense review and was therefore ruled as a loss contract in 2016.

Recognition of this contract as a loss contract led to a restatement of accounts, primarily for fiscal 2015. This restatement will hurt free cash flow to the tune of $25–$30 million in 2016 and beyond. Even though the company has maintained that this loss was a one-time event and that other contracts are doing well, it could make investors jittery.

Consequently, since the announcement of the restatement, shares of the company have seen a significant decline from Aug 2016. In spite of a few upward spike, the company’s share  is yet to fully recover from the lows it touched in August.

Zacks Rank & Key Picks

Orbital ATK currently has a Zacks Rank #3 (Hold).A few better-ranked stocks in the Aerospace sector include Northrop Grumman Corporation (NOC - Free Report) , Engility Holdings, Inc. (EGL - Free Report) and General Dynamics Corporation (GD - Free Report) .

Northrop delivered an average positive earnings surprise of 8.29% in the trailing four quarters.The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Engility, another Zacks Rank #1 stock, recorded an average positive earnings surprise of 23.19% in the trailing four quarters.

General Dynamics recorded an average positive earnings surprise of 5.55% in the trailing four quarters. The company carries a Zacks Rank #2 (Buy).

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