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CSRA Wins $34.6 Million Cloud-Based Contract from US Navy

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CSRA Inc. recently announced that it has been chosen to provide cloud computing services to the Navy’s Research and Development Establishment (NR&DE). This blanket purchase agreement signed with the Department of Navy (DON) is potentially worth $34.6 million and also includes two one-year options.

Per the agreement, CSRA will serve the Navy’s Science and Technology (S&T) community with cloud migration services to Amazon’s (AMZN - Free Report) AWS and Microsoft’s (MSFT - Free Report) Azure. The relevant cloud engineering and maintenance services will also be provided by CSRA. Notably, CSRA will be the industry’s first company to serve the U.S. Navy with these facilities.

This set up is anticipated to assist the Navy in accelerated development and testing of new-age technologies with the environment becoming more secure and cost effective due to the usage of cloud platforms. As a result, the integration of the technical enhancements into the worldwide defense forces is also expected to speed up.

We believe this new contract win will be a positive that will boost the company’s top line going forward and boost shares. The stock has gained 2.3% year to date, underperforming the 26.9% rally of the industry it belongs to.

CSRA’s Growth Prospects

The company’s deep domain knowledge and expertise in next-generation IT services is aiding it to win new contracts on a regular basis. In early September, CSRA via its 79% shareholding joint venture Eagle Alliance won a whopping $2.4 billion contract from the Department of Defense. The performance period of the contract is around 10 years and CSRA will be responsible for enterprise related information technology (IT) services.

CSRA Inc. Revenue (TTM)

CSRA Inc. Revenue (TTM) | CSRA Inc. Quote

Recently the company also won a $115 million contract from the U.S. Environmental Protection Agency (EPA). While reporting fiscal first-quarter 2018 results, CSRA stated that its new business win rate has been 39% over the trailing 12 months. Re-compete win rate in the last year was 80%.

Moreover, the company’s strong base of partners that include the likes of ServiceNow (NOW) Microsoft and Red Hat among others is a positive. The acquisition of NES in July 2017 is also expected to be a tailwind for CSRA’s top-line going forward.

Zacks Rank and Stock to Consider

CSRA currently has a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology space is Applied Materials, Inc. (AMAT - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term earnings growth rate for Applied Materials is projected to be 17.1%.

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