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Defense Stock Roundup: Lockheed Martin Steals the Show; Raytheon, Boeing Win Big
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In the last five trading sessions, the Aerospace-Defense industry saw a mixed performance on the bourses and a generous flow of funds from the Pentagon. Clearly, a 0.7% drop in the S&P 500 Aerospace & Defense (Industry) Index in the timeframe and a 0.4% fall in the Dow Jones U.S. Aerospace & Defense Index resulted in a weak share price performance.
Among the week’s highlights, defense majors Lockheed Martin Corp. (LMT - Free Report) , General Dynamics Corp. (GD - Free Report) , United Technologies Corp. , Boeing Company (BA - Free Report) and Raytheon Company secured a number of orders from the Department of Defense’s (“DoD”) daily funding session. (Read: Defense Stock Roundup for Dec 21, 2016 here.)
The outlook for Aerospace-Defense notably improved following the election on hopes that the incoming administration will stick to its campaign promise of ramping up military spending. Of course, the plans haven’t been spelt out yet, but this hasn’t stopped the Aerospace industry stocks from logging big gains since Nov 8.
Recap of the Week’s Most Important Stories
1. Missiles and Fire Control, a business unit of Pentagon’s largest defense contractor Lockheed Martin, clinched a foreign military sales ("FMS") contract from the U.S. Army for Patriot Advanced Capability-3 (PAC-3) and PAC-3 Missile Segment Enhancement (PAC-3 MSE) interceptors production and delivery in fiscal 2017. Valued at $1.5 billion, this contract was awarded by the Army Contracting Command, Redstone Arsenal, AL.
The contract covers 205 missile segment enhancements of U.S. and Qatar missiles, and 58 cost reduction initiatives for U.S. and Republic of Korea missiles. Lockheed Martin will also provide spare parts to the U.S., Qatar, Republic of Korea, Taiwan, United Arab Emirates and Saudi Arabia, along with associated ground support equipment.
Notably, PAC-3 is the most advanced and powerful terminal air defense missile that can defend against tactical ballistic missiles, cruise missiles and aircraft. It is a high-velocity interceptor that counters incoming targets by direct body-to-body impact. The PAC-3 missile uses a solid propellant rocket motor, aerodynamic controls, attitude control motors and inertial guidance to navigate. (Read more: Lockheed Martin Secures $1.5B Army Deal for PAC-3)
2. Defense behemoth General Dynamics’s National Steel and Shipbuilding Co. (NASSCO) business division secured a modification contract from the U.S. Navy. The deal aims at procuring long lead time material, detail, design and construction of the Expeditionary Mobile Base 5 (ESB 5). Valued at $324.5 million, this contract was awarded by the Naval Sea Systems Command, Washington, D.C.
The ESB will provide a flight deck and expansive reconfigurable mission deck; military personnel accommodations; small craft launch and recovery capabilities; and command, control, communication, computer and intelligence for communication and computer equipment across multiple networks and architectures.
Notably, ESB –– formerly known as the Mobile Landing Platform (MLP) or Afloat Forward Staging Base (AFSB) –– is a highly flexible ship that offers logistics movement from sea to shore, supporting a broad range of military operations. ESB ships operate as mobile sea bases, providing the Navy Fleet with a critical access infrastructure to support flexible deployment of forces and supplies, whenever necessary.
Currently, General Dynamics has a Zacks Rank #3.
3. Diversified conglomerate United Technologies' unit, Pratt and Whitney, secured a modification contract for the sustainment of F119-PW-100 engines. Per the contract, the company will provide parts essential for engine sustainment. Valued at $313.9 million, this contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson AFB, OH.
Notably, the F119-PW-100 turbofan is the only operational fifth generation fighter engine today and is the most advanced production engine combining stealth technologies and vectored thrust with high thrust-to-weight performance to provide unprecedented maneuverability and survivability. Two Pratt & Whitney F119 engines power the U.S Air Force’s F-22 Raptor. Supercruise, the ability to operate supersonically without afterburning, gives the F-22 superior combat performance without compromising the mission range.
United Technologies currently carries a Zacks Rank #3.
4. Aerospace giant Boeing won a modification contract worth $308.3 million to provide for the engineering change proposal (ECP) 6472 integration of Next Generation Jammer (NGJ) Pod onto the EA-18G aircraft. The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.
This contract will support the engineering and manufacturing development phase of the NGJ program. It will comprise the design and manufacturing of 12 ECP 6472 A kits as well as the integration, demonstration, and test of NGJ pods on the EA-18G Aircraft and equipment required for System Integration Laboratories.
Boeing currently carries a Zacks Rank #3.
5. Defense behemoth Raytheon won a contract from the U.S. Navy to procure Tomahawk Block IV All-Up-Round vertical launch system missiles and spares. The contract is valued at $303.7 million. It was awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the contract, Raytheon will procure214 missiles and spares for the Navy and spares for the UK government. It consists of 99% purchases for the Navy and the remaining 1% for the UK under the foreign military sales (FMS) program.
Tomahawk is a long-range, all-weather, subsonic cruise missile named after the Native American axe. Interestingly, the Block IV variant uses a two-way satellite data-link, which allows it to change course mid-flight to reprogrammed targets. The missiles can be launched from surface ships with a Vertical Launch System (VLS) as well as from submarines with a Capsule Launch System (CLS). (Read more: Raytheon Clinches $304M Navy Contract for Missile Spares)
Most of the major defense stocks recorded a weak performance over the past five trading sessions. Among the stocks listed below, only one saw gains. For the past six months, the overall picture of the industry was quite assuring with most stocks gaining strongly. Notably, Textron gained the maximum followed by General Dynamics. The following table shows the price movement of the major defense players over the past five trading days and during the last six months.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Defense Stock Roundup: Lockheed Martin Steals the Show; Raytheon, Boeing Win Big
In the last five trading sessions, the Aerospace-Defense industry saw a mixed performance on the bourses and a generous flow of funds from the Pentagon. Clearly, a 0.7% drop in the S&P 500 Aerospace & Defense (Industry) Index in the timeframe and a 0.4% fall in the Dow Jones U.S. Aerospace & Defense Index resulted in a weak share price performance.
Among the week’s highlights, defense majors Lockheed Martin Corp. (LMT - Free Report) , General Dynamics Corp. (GD - Free Report) , United Technologies Corp. , Boeing Company (BA - Free Report) and Raytheon Company secured a number of orders from the Department of Defense’s (“DoD”) daily funding session. (Read: Defense Stock Roundup for Dec 21, 2016 here.)
The outlook for Aerospace-Defense notably improved following the election on hopes that the incoming administration will stick to its campaign promise of ramping up military spending. Of course, the plans haven’t been spelt out yet, but this hasn’t stopped the Aerospace industry stocks from logging big gains since Nov 8.
Recap of the Week’s Most Important Stories
1. Missiles and Fire Control, a business unit of Pentagon’s largest defense contractor Lockheed Martin, clinched a foreign military sales ("FMS") contract from the U.S. Army for Patriot Advanced Capability-3 (PAC-3) and PAC-3 Missile Segment Enhancement (PAC-3 MSE) interceptors production and delivery in fiscal 2017. Valued at $1.5 billion, this contract was awarded by the Army Contracting Command, Redstone Arsenal, AL.
The contract covers 205 missile segment enhancements of U.S. and Qatar missiles, and 58 cost reduction initiatives for U.S. and Republic of Korea missiles. Lockheed Martin will also provide spare parts to the U.S., Qatar, Republic of Korea, Taiwan, United Arab Emirates and Saudi Arabia, along with associated ground support equipment.
Notably, PAC-3 is the most advanced and powerful terminal air defense missile that can defend against tactical ballistic missiles, cruise missiles and aircraft. It is a high-velocity interceptor that counters incoming targets by direct body-to-body impact. The PAC-3 missile uses a solid propellant rocket motor, aerodynamic controls, attitude control motors and inertial guidance to navigate. (Read more: Lockheed Martin Secures $1.5B Army Deal for PAC-3)
Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
2. Defense behemoth General Dynamics’s National Steel and Shipbuilding Co. (NASSCO) business division secured a modification contract from the U.S. Navy. The deal aims at procuring long lead time material, detail, design and construction of the Expeditionary Mobile Base 5 (ESB 5). Valued at $324.5 million, this contract was awarded by the Naval Sea Systems Command, Washington, D.C.
The ESB will provide a flight deck and expansive reconfigurable mission deck; military personnel accommodations; small craft launch and recovery capabilities; and command, control, communication, computer and intelligence for communication and computer equipment across multiple networks and architectures.
Notably, ESB –– formerly known as the Mobile Landing Platform (MLP) or Afloat Forward Staging Base (AFSB) –– is a highly flexible ship that offers logistics movement from sea to shore, supporting a broad range of military operations. ESB ships operate as mobile sea bases, providing the Navy Fleet with a critical access infrastructure to support flexible deployment of forces and supplies, whenever necessary.
Currently, General Dynamics has a Zacks Rank #3.
3. Diversified conglomerate United Technologies' unit, Pratt and Whitney, secured a modification contract for the sustainment of F119-PW-100 engines. Per the contract, the company will provide parts essential for engine sustainment. Valued at $313.9 million, this contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson AFB, OH.
Notably, the F119-PW-100 turbofan is the only operational fifth generation fighter engine today and is the most advanced production engine combining stealth technologies and vectored thrust with high thrust-to-weight performance to provide unprecedented maneuverability and survivability. Two Pratt & Whitney F119 engines power the U.S Air Force’s F-22 Raptor. Supercruise, the ability to operate supersonically without afterburning, gives the F-22 superior combat performance without compromising the mission range.
United Technologies currently carries a Zacks Rank #3.
4. Aerospace giant Boeing won a modification contract worth $308.3 million to provide for the engineering change proposal (ECP) 6472 integration of Next Generation Jammer (NGJ) Pod onto the EA-18G aircraft. The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.
This contract will support the engineering and manufacturing development phase of the NGJ program. It will comprise the design and manufacturing of 12 ECP 6472 A kits as well as the integration, demonstration, and test of NGJ pods on the EA-18G Aircraft and equipment required for System Integration Laboratories.
Boeing currently carries a Zacks Rank #3.
5. Defense behemoth Raytheon won a contract from the U.S. Navy to procure Tomahawk Block IV All-Up-Round vertical launch system missiles and spares. The contract is valued at $303.7 million. It was awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the contract, Raytheon will procure214 missiles and spares for the Navy and spares for the UK government. It consists of 99% purchases for the Navy and the remaining 1% for the UK under the foreign military sales (FMS) program.
Tomahawk is a long-range, all-weather, subsonic cruise missile named after the Native American axe. Interestingly, the Block IV variant uses a two-way satellite data-link, which allows it to change course mid-flight to reprogrammed targets. The missiles can be launched from surface ships with a Vertical Launch System (VLS) as well as from submarines with a Capsule Launch System (CLS). (Read more: Raytheon Clinches $304M Navy Contract for Missile Spares)
Raytheon currently carries a Zacks Rank #3.
Performance
Aerospace - Defense Industry 5YR % Return
Aerospace - Defense Industry 5YR % Return
Most of the major defense stocks recorded a weak performance over the past five trading sessions. Among the stocks listed below, only one saw gains. For the past six months, the overall picture of the industry was quite assuring with most stocks gaining strongly. Notably, Textron gained the maximum followed by General Dynamics. The following table shows the price movement of the major defense players over the past five trading days and during the last six months.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>