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Boeing Wins Deal to Support F/A-18E/F and EA-18G Programs

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The Boeing Company (BA - Free Report) recently secured a contract to deliver production engineering support in association to installation and integration of systems required to initiate, evaluate, and integrate modifications to F/A-18E/F and EA-18G aircraft. These efforts will cater to continued system effectiveness and product assurance for aircraft testing.

Valued at $13.8 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the work will be executed in Patuxent River, MD. Boeing is expected to complete the entire task by December 2019.

Brief Note on F/A-18 and E/A-18

Boeing’s F/A-18 Block III Super Hornet is a twin-engine, supersonic, all-weather multirole fighter jet. The U.S. Navy’s tactical and air superiority aircraft is capable of performing virtually every mission in the tactical spectrum — including air superiority, day/night strike with precision-guided weapons, fighter escort, close air support, suppression of enemy air defenses, maritime strike, reconnaissance, forward air control and tanker missions.

Whereas the EA-18G Growler is the most advanced airborne electronic attack (AEA) platform, which operates from either an aircraft carrier or land bases.

What’s Favoring Boeing?

Boeing, being one of the major players in the defense business, stands out among its peers by the virtue of its broadly diversified programs, strong order bookings and solid backlog. Furthermore, the company’s expertise lies in programs related to a wide variety of aircraft components, repairs and modification work.

Considering Boeing’s combat-proven aerospace programs and associated services, along with the rapidly growing need for military aircraft in the light of the enhancing geopolitical uncertainties worldwide, the company witnesses a solid inflow of orders from Pentagon. These contract wins, in turn, boost top-line growth for the company’s defense business segment.

Evidently, in third-quarter 2018, revenues at the Boeing Defense, Space & Security (BDS) segment, which manufactures military jets like F/A-18, EA-18 Growler and its related components, increased 13% year over year to $5.73 billion. In line with this, we may expect the latest contract win to help this unit deliver similar top-line performance in the coming quarters.

Meanwhile, toward the end of June 2018, the U.S. Senate approved the fiscal 2019 defense budget that provisions for major war fighting investments worth $21.7 billion for aircraft. Boeing, being the largest aircraft manufacturer in the United States, is surely going to be a significant beneficiary from the budget, which includes an investment plan of $2 billion for procuring 24 F/A-18E/F aircraft. Such inclusions reflect solid growth prospects for the BDS segment, which, in turn, are likely to boost Boeing’s profit margin.

Price Movement

Boeing’s stock has gained 26.2% in the past 12 months compared with the industry’s growth of 5%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.

 

 

Zacks Rank & Other Key Picks

Boeing currently carries a Zacks Rank #2 (Buy).

A few other top-ranked companies in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Raytheon Company (RTN - Free Report) and Teledyne Technologies Inc. (TDY - Free Report) .

While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Raytheon carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Teledyne Technologies delivered average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 6.1% to $8.75 in the past 90 days.

Raytheon delivered average positive earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 1.7% to $10.10 cents in the past 90 days.

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