Rockwell Collins Inc. (COL - Free Report) has been awarded a contract worth $22 million by the Defense Logistics Agency (“DLA”) to provide support for the Robins Air Force Base maintenance depot.
This performance-based logistics (PBL) contract will be run for three years with Rockwell Collins and the company will be responsible for providing total supply chain management for replacing parts on the AN/ARC-171, AN/ARC-190 and AN/ARR-85 airborne communication product.
Benefits to Air Force
The PBL agreement is expected to bring enhanced alertness to the Air Force. This will be brought about by ensuring greater visibility to demand at the depot maintenance line. The contract will also result in reduced inventory and lower infrastructural costs. Further, value added logistics, engineering support as well as obsolescence management will be part of the company’s contract.
What is Favoring Rockwell Collins?
Widespread geo-political and socio-economic tensions have bolstered growth of the aerospace and defense industry for decades now. In recent times, escalating international terrorist attacks and emergence of civil wars have added impetus to the space. Impressively, stocks in the Zacks Aerospace sector have rallied 35% in the last 12 months, outperforming the S&P 500’s 23.8% gain.
With a majority of macroeconomic factors favoring the sector, such outperformance can be expected to continue in the coming days. Further, given the increase in cyber attacks, terror threats and geopolitical instability, there is a pressing need to boost security and defense by all countries.
Not just Rockwell Collinsbut other major defense contractors in the nation like Lockheed Martin Corporation (LMT - Free Report) and Boeing Company (BA - Free Report) are also putting their best foot forward to make the most of this opportunity and expand.
Rockwell Collins has agreed to be acquired by United Technologies Corporation (UTX - Free Report) for $30 billion.
The deal is expected to create one of the world’s largest aircraft-equipment manufacturers and comes as good news for the latter’s shareholders, who are set to enjoy more than 7% premium in terms of share price.
Shares of Rockwell Collins have outperformed the industry in the last six months. The company’s shares gained 27.0%, compared with industry’s growth of 18.6%.
Rockwell Collins 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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