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Orbital ATK (OA) Secures $157M Contract from the U.S. Navy

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Orbital ATK, Inc. (OA - Free Report) announced that it has been awarded a $157 million contract from the U.S. Navy.

Per the contract, the company will produce Lot 6 for Advanced Anti-Radiation Guided Missile (AARGM). The company will convert AGM-88B High Speed Anti-Radiation Missiles into 230 AGM-88E AARGM All-Up-Rounds and six captive air training missiles. 90% work related to the contract will be carried out at Northridge, CA and rest will be done at Ridgecrest, CA (10%).

About AARGM

The Advanced Anti-Radiation Guided Missile (AGM-88E) is known to be the latest and most advanced weapon system. These are highly used by the U.S. Navy, U.S. Marine Corps and Italian Air Force for destroying the enemy air defenses and time-critical, mobile targets. This supersonic, medium-range, air-launched tactical missiles are being used by U.S. Navy and allied strike aircraft, and are compatible with all variants such as F/A-18, Tornado, EA-18G, F-16, EA-6B and F-35.

Orders & Backlog of Orbital ATK

Orbital ATK is one of the trusted contractors for the U.S. Department of Defense. Owing to its diverse product offering, the company continues to win contracts from its wide customer base. In second-quarter 2017, the company received $1,400 million in new firm and option orders. Total backlog was nearly $15.4 billion, up 4% year over year, out of which, firm backlog was $9.5 billion, up 10% year over year.

Other than contracts from different verticals of the U.S. Defense, the company also received a $90-million contract from Northrop Grumman (NOC - Free Report) to supply parts for the B-2 Spirit stealth bomber in May. This partnership with Northrop Grumman is expected to benefit the company’s Aerospace Structures Division.

Defense Industry Scenario

The global unrest associated with the rising terror activities has forced most of the nations to give additional attention to their defense infrastructure. Moreover, the recent tension between the United States and North Korea has created increased opportunity for the defense industry to gain from the consequences. President Trump has proposed a 10% hike in defense spending of fiscal 2018. As a result, the major aerospace and defense companies such as Orbital ATK, General Dynamics (GD - Free Report) , Lockheed Martin (LMT - Free Report) and many others continue to receive orders from different verticals of the U.S. Defense.

Price Movement

Shares of Orbital ATK have returned 18.4%, compared with the industry’s gain of 14.7% in the last six months.

The company’s performance is expected to be driven by diverse product offerings and rising backlog.

Zacks Rank

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

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