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Bell-Boeing JV Wins Two Navy Deals Worth $412M for V-22
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Bell-Boeing, the strategic joint venture (JV) between aircraft major The Boeing Company (BA - Free Report) and diversified U.S. conglomerate Textron Inc.’s (TXT - Free Report) wholly owned subsidiary – Bell Helicopter, recently secured two modification contracts totaling $411.9 million.
Details of the deals
The contracts were awarded by the Naval Supply Systems Command Weapons Systems Support, Philadelphia, PA. They cover the repair of various parts of the V-22 aircraft.
The larger one of the contracts is valued at $246.2 million and could reach $545.2 million, if all options are exercised. It covers a one-year base period and a one-year option period.
Work on this contract is expected to be complete by Dec 2018 and will continue through Dec 2019, if all options are exercised. The majority of the work will be carried out in Fort Worth, TX, while the rest will be performed in Ridley Park, PA. The contract will use fiscal 2017 working capital fund (Navy).
The other contract, worth $165.7 million, has a two-year base period with no option. Work related to this contract is expected to be complete by Dec 31, 2019, and will be carried out in Fort Worth. It will use fiscal 2017 working capital fund (Navy).
A Brief Note on the V-22
Formed in 1981, Bell-Boeing JV’s primary product is V-22 Osprey – a joint-service multirole combat aircraft that utilizes tiltrotor technology to combine the vertical performance of a helicopter with the speed and range of a fixed-wing aircraft. Notably, this aircraft can take off, land and hover like a helicopter, and once airborne, it can transform into a turboprop airplane capable of high-speed, high-altitude flight.
Our View
The rapid rise in terror attacks has compelled the U.S. government to expand its defense budget substantially in recent times, which has resulted in the modernization of tactical equipment and modification of the existing ones. Further, the emergence of ISIS has added to this nation’s fears as it has been in the organization’s target list since the beginning.
Naturally, Pentagon has been channeling substantial funds to the defense contractors for enhanced security. With no improvement in the geopolitical situation expected as of now, defense majors like Boeing and Textron are poised to gain substantially, going forward.
Price Movement
Boeing’s stock has gained about 5.6% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry’s gain of 12.5%. This could be because Boeing continues to face challenges from uncertainties related to high-cost programs, risks related to key project executions, order cancellations and stiff competition.
On the other hand, Textron's stock has gained about 18.3% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry’s improvement. This could have been driven by the company's systematic inorganic growth strategy, along with its focus on strengthening international presence.
Zacks Rank & Key Picks
Both Boeing and Textron currently carry a Zacks Rank #3 (Hold). However, a couple of better-ranked stocks in the aerospace and defense sector include Engility Holdings, Inc. and Northrop Grumman Corporation (NOC - Free Report) .
On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 earnings estimates increased 13.4% over the last 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company’s 2016 earnings estimates were up just 0.1% in the last 30 days.
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Bell-Boeing JV Wins Two Navy Deals Worth $412M for V-22
Bell-Boeing, the strategic joint venture (JV) between aircraft major The Boeing Company (BA - Free Report) and diversified U.S. conglomerate Textron Inc.’s (TXT - Free Report) wholly owned subsidiary – Bell Helicopter, recently secured two modification contracts totaling $411.9 million.
Details of the deals
The contracts were awarded by the Naval Supply Systems Command Weapons Systems Support, Philadelphia, PA. They cover the repair of various parts of the V-22 aircraft.
The larger one of the contracts is valued at $246.2 million and could reach $545.2 million, if all options are exercised. It covers a one-year base period and a one-year option period.
Work on this contract is expected to be complete by Dec 2018 and will continue through Dec 2019, if all options are exercised. The majority of the work will be carried out in Fort Worth, TX, while the rest will be performed in Ridley Park, PA. The contract will use fiscal 2017 working capital fund (Navy).
The other contract, worth $165.7 million, has a two-year base period with no option. Work related to this contract is expected to be complete by Dec 31, 2019, and will be carried out in Fort Worth. It will use fiscal 2017 working capital fund (Navy).
A Brief Note on the V-22
Formed in 1981, Bell-Boeing JV’s primary product is V-22 Osprey – a joint-service multirole combat aircraft that utilizes tiltrotor technology to combine the vertical performance of a helicopter with the speed and range of a fixed-wing aircraft. Notably, this aircraft can take off, land and hover like a helicopter, and once airborne, it can transform into a turboprop airplane capable of high-speed, high-altitude flight.
Our View
The rapid rise in terror attacks has compelled the U.S. government to expand its defense budget substantially in recent times, which has resulted in the modernization of tactical equipment and modification of the existing ones. Further, the emergence of ISIS has added to this nation’s fears as it has been in the organization’s target list since the beginning.
Naturally, Pentagon has been channeling substantial funds to the defense contractors for enhanced security. With no improvement in the geopolitical situation expected as of now, defense majors like Boeing and Textron are poised to gain substantially, going forward.
Price Movement
Boeing’s stock has gained about 5.6% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry’s gain of 12.5%. This could be because Boeing continues to face challenges from uncertainties related to high-cost programs, risks related to key project executions, order cancellations and stiff competition.
On the other hand, Textron's stock has gained about 18.3% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry’s improvement. This could have been driven by the company's systematic inorganic growth strategy, along with its focus on strengthening international presence.
Zacks Rank & Key Picks
Both Boeing and Textron currently carry a Zacks Rank #3 (Hold). However, a couple of better-ranked stocks in the aerospace and defense sector include Engility Holdings, Inc. and Northrop Grumman Corporation (NOC - Free Report) .
On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 earnings estimates increased 13.4% over the last 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company’s 2016 earnings estimates were up just 0.1% in the last 30 days.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>