The Boeing Co. (BA - Free Report) has won a contract to supply spare parts of F/A-18 A-F and F/A-18 aircraft. It has been awarded by the Defense Logistics Agency Aviation, Philadelphia, PA.
Valued at $323.5 million, the deal includes a five-year base contract with one five-year option period.
Work is scheduled to be completed by Dec 30, 2023 and will be carried out at Missouri. The contract will use Navy working capital funds of fiscal 2017 through fiscal 2023.
A Brief Note on F/A-18
Boeing’s F/A-18 Super Hornet – a twin-engine, supersonic, all weather multirole fighter jet – is the U.S. Navy’s primary strike and air superiority aircraft. It is capable of landing and taking off from an aircraft carrier.
Among the F/A-18 family, F/A 18E is a single-seat variant of the Super Hornet that is about 25% larger than its predecessor, the F/A-18C/D but comparatively contains 42% lesser structural parts.
Boeing is one of the major players in the defense business and stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. In particular, among other defense equipments the company’s key forte has been combat-proven aircraft. It also started developing military aerial refueling and strategic transport aircraft, of late.
Notably, with its proven expertise in aerospace programs, Boeing has been clinching a huge number of contracts from the Pentagon for long.
Recently, the company clinched a modification contract, valued at $222.5 million, for eight CH-47F new build helicopters. The deal aims to support the Royal Saudi Land Forces Aviation Command. Again, it won a $349.2 million contract for Ground-Based Strategic Deterrent. Per the agreement, Boeing will deliver an affordable total system replacement of Minuteman III missile to meet intercontinental ballistic missiles operational requirements. To this end, we expect the recently won contract to add further impetus to the company’s growth trajectory.
Meanwhile, Trump’s proposal to boost the nation’s defense budget by 10% in 2018 from that of 2016 is likely to benefit defense biggies like Boeing, Lockheed Martin Corp. (LMT - Free Report) , General Dynamics Corp. (GD - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) .
Shares of Boeing have surged 78.5% over the last 12 months, outperforming the broader industry’s gain of 36.4%. This may have been driven by the company’s strong balance sheet and cash flows that provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Boeing currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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