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Boeing (BA) Wins $131M Deal for MH-47G Block II Aircraft

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The Boeing Company (BA - Free Report) recently won a $131.1 million contract for the procurement of four MH-47G Block II aircraft. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Work related to the deal will be executed in Ridley Township, PA and is expected to get completed by Jun 29, 2020.

Brief Note on MH-47G Block II Aircraft

Boeing’s MH-47G is a special operations variant of the CH-47 Chinook helicopter. The CH-47F is a twin-engine tandem rotor heavy-lift transport helicopter used by the U.S. Army and other allied nations. The aircraft’s primary mission is to transport troops and large payloads at high speed and long ranges. It is capable of external sling-load operations, artillery placements, battlefield resupply and air assaults.

What’s Favoring Boeing?

Boeing, being one of the major players in the defense business, stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. Its defense segment, Boeing Defense, Space & Security (BDS), witnessed a 13% year-over-year increase in first-quarter 2018 revenues to $5.76 billion, driven by high weapon deliveries.

In particular, among other defense equipments, Boeing’s key forte has been manufacturing combat-proven aircraft. Also, the company has lately started developing military aerial refueling and strategic transport aircraft for its fixed-wing military aircraft programs. Such capabilities along with its proven expertise in aerospace programs have enabled Boeing in clinching major contracts from the Pentagon on a frequent basis.

Inevitably, Boeing has been witnessing strong uptick in demand for its rotorcraft and rotary wing programs that includes the MH-47G. This latest contact win is evidence to the same and we expect Boeing to witness strong demand pull in the days ahead.

Meanwhile, last month the U.S. Senate approved the fiscal 2019 defense budget that provisioned major war fighting investments of $21.7 billion for aircraft. Such budgetary developments reflect solid growth prospects for the company’s BDS segment, which, in turn, are likely to boost the company’s profit margin.

Price Movement

Boeing’s stock rallied about 65% in a year compared with the industry’s growth of 28.2%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.

Zacks Rank & Other Stocks to Consider

Boeing currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the same space are Northrop Grumman (NOC - Free Report) , Wesco Aircraft Holdings (WAIR - Free Report) and Engility Holdings (EGL - Free Report) .

While Northrop Grumman sports a Zacks Rank #1, Wesco Aircraft Holdings and Engility Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northrop Grumman delivered an average positive earnings surprise of 13.87% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 6.6% to $16.62 in the last 90 days.

Wesco Aircraft Holdings’ long-term growth rate is pegged at 12%. The Zacks Consensus Estimate for 2018 earnings has risen by 10% to 77 cents in the last 90 days.

Engility Holdings came up with an average positive earnings surprise of 15.08% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 0.5% to $1.91 in the last 90 days.

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