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Defense Stock Roundup: BA, LLL, NOC Win Deals, BA Releases Q1 Delivery Numbers

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Following President Trump’s tweet of the United States gearing up for a possible military strike on Syria, share price of several U.S. stocks tumbled. As geopolitical dispute continues to rise on escalating tension between Russia and the United States, the boarder market once again went on a bumpy ride.  As a result of this, the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense indices dipped 0.7% in the last five trading sessions.

Nevertheless, keeping with its trend, the industry witnessed a generous flow of funds from the Pentagon in the trailing five trading sessions. Among the highlights of the last week, defense majors The Boeing Company (BA - Free Report) , L3 Technologies, Inc. (LLL - Free Report) , Northrop Grumman Corp. (NOC - Free Report) , Lockheed Martin Corp. (LMT - Free Report) and Orbital ATK, Inc. secured a number of orders from the Department of Defense’s daily funding session. Boeing released its delivery numbers for first quarter of 2018.

(Read Defense Stock Roundup for Apr 06, 2018 here)

Recap of Last Week’s Key Stories

1. Boeing recently secured a modification contract worth $50 million for original equipment manufacturing of Royal Saudi Air Force F-15SA fighter jet. Per the terms, the modification entitles one-year extension to the existing contract, thus taking the total cumulative face value of the deal to $305 million. 

The contract was awarded by the 338th Specialized Contracting Squadron, Joint Base San Antonio Randolph, Texas. Work related to this deal is expected to be over by Aug 6, 2019 and will be carried out in Khamis, Saudi Arabia (read more: Boeing Wins F-15SA Deal for Cumulative Face Value of $305M).

Also, Boeing recently announced the program deliveries across its commercial and defense operations for the first quarter of 2018. The figures mark 40.5% fall in defense shipments from the previous year.

In its defense and space business, Boeing’s deliveries totaled 25 in the first quarter of 2018, down from 42 dispatched in the year-ago period. Total deliveries consisted of six AH-64 Apache helicopters (remanufactured) and eight Chinook helicopters (new and renewed). The company also delivered four P-8’s, five F/A-18s and two F-15s (read more: Boeing Q1 Commercial Deliveries Up Y/Y, Defense Slips).

2. L3 Technologies clinched a contract worth $218 million, per which the company will procure new training systems as well as hardware and software upgrades for F/A-18C/D/E/F and EA-18G jets. Work related to this deal is scheduled to be over by April 2023 and will be performed in Arlington, TX.

The contract was awarded by the Naval Air Warfare Center Training Systems Division, Orlando, FL. The latest deal will modify the existing aircrew training systems for these military aircraft. Further, this contract will support software configuration set upgrades, engineering change proposals, Naval Aviation Simulation Master Plan upgrades and spare parts for hardware deliverables (read more: L3 Technologies Wins Deal to Upgrade F/A-18 & EA-18 Jets).

3. Northrop Grumman’s unit, Northrop Grumman Systems Corp., secured a modification contract worth $210 million for providing Large Aircraft Infrared Counter Measures (LAIRCM) equipment and support. Work related to the deal is scheduled to be over by Apr 30, 2020.

The contract was awarded by the Air Force Life Cycle Management Center, Wright Patterson Air Force Base, Ohio. Per the terms, this modification will take the total cumulative face value of the deal to $1.6 billion. The project will be executed in Rolling Meadows, IL (read more: Northrop Grumman's Unit Wins $210M Deal to Support LAIRCM).

4. Lockheed Martin won $117-million modification contract under the foreign military sales program for the delivery of Modernized Laser Range Finder Designators (LRFD) to support Netherlands’ AH-64 Apache helicopter. The contract was awarded by the U.S. Army Contracting Command, Rock Island Arsenal, Illinois.

Work related to the deal is scheduled to be completed by Aug 31, 2020. Operations related to the deal will be carried out in Orlando, FL (read more: Lockheed Martin Wins $117M Contract for LRFD Delivery).

5. Orbital ATK recently received orders worth more than $115 million from the U.S. Army to supply small-caliber ammunition. The ammunitions will be manufactured at Lake City Army Ammunition Plant in Independence, MO, owned by the government and operated by Orbital ATK.

Per the terms of the contract, Orbital ATK will supply 5.56mm, 7.62mm and .50 caliber ammunition (read more: Orbital ATK Receives Order for Small-Caliber Ammunition).

Performance

Over the last five trading sessions, the defense biggies put up a solid show. Boeing gained the most with its share price rising 3.5% in this period.

Over the last six months as well, the entire industry has put up a stellar performance. Keeping up with its usual trend, Boeing once again gained the most, with its shares surging 28.9%, followed by Northrop Grumman.

The following table shows the price movement of the major defense players over the past five trading days and during the last six months.

CompanyLast WeekLast 6 Months
LMT2.37%6.77%
BA3.49%28.85%
GD1.19%2.11%
RTN2.40%16.96%
NOC0.15%17.87%
COL0.03%-0.73%
TXT2.02%10.27%
LLL1.87%12.00%

 

What’s Next in this Space?

Textron, Inc. (TXT - Free Report) is set to release the first quarter of 2018 results on Apr 18.

Honeywell International, Inc. (HON - Free Report) is scheduled to release the first quarter of 2018 results on Apr 20.

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