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L3 Technologies Secures $48M Contract for F-16 MTC Program

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L3 Technologies, Inc. (LLL - Free Report) recently secured a modification contract worth $48.1 million for the F-16 Mission Training Center (MTC) program. The contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, Maryland.

Per the terms of the deal, L3 Technologies will incorporate the 9th and 10th F-16 MTC Production Buy Engineering Change Proposal. Work related to the deal will be performed in Arlington, TX and is expected to get completed by Mar 26, 2020. L3 Technologies will utilize fiscal 2018 aircraft procurement funds for completing the task.

A Brief Note on MTC

The MTC program enables realistic F-16 training by precisely simulating weapon systems, mission profiles and modifications, which a pilot may encounter in a real aircraft. The F-16 MTC features four high-definition simulators, each encompassing an F-16 cockpit linked to the USAF’s distributed missions operations (DMO) network. Further, the high-definition simulators are integrated with high-definition databases, image- generation systems and physics-based processing technology to support basic and advanced pilot mission training, tactics validation and mission rehearsals.

Apart from maximizing pilot operational readiness, it will help in reducing training costs to the U.S. Air Force. Through the program, F-16 pilots will be able to effectively detect, recognize and identify targets from the same distance as in a real mission.

What’s Favoring L3 Technologies?

L3 Technologies' Electronic Systems segment, which provides flight simulation and training, recorded net sales of $812 million reflecting a 6% year-over-year rise. We believe this latest contract involving the incorporation of MTC will further boost the segment's performance.

Meanwhile, toward the end of June 2018, the U.S. Senate approved the fiscal 2019 defense budget that provisions for investments worth $21.7 billion on military aircraft. This, in turn, will help companies like L3 Technologies, which is a prime contractor in providing aircraft simulation and training systems, precision weapons, aircraft sustainment equipments, and a broad range of communication, electronic and sensor systems for various military aircraft programs.

Price Movement

In a year’s time, shares of L3 Technologies increased 16.7% compared with the industry’s 29% rally. The underperformance can be attributed to low contract orders from international markets and weak performance in some of the product lines.



Zacks Rank & Other Stocks to Consider

L3 Technologies currently carries a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Engility Holdings (EGL - Free Report) and Huntington Ingalls Industries (HII - Free Report) .

While Aerojet Rocketdyne Holdings sports a Zacks Rank #1 (Strong Buy), Engility Holdings and Huntington Ingalls carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with an average positive earnings surprise of 9.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 30.9% to $1.27 in the last 90 days.

Engility Holdings delivered an average positive earnings surprise of 19% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 16.8% to $2.02 in the last 90 days.

Huntington Ingalls Industries came up with an average positive earnings surprise of 9.48% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 3.7% to $17.24 in the last 90 days.

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