Textron Inc. (TXT - Free Report) recently secured a $314.3-million modification contract for delivering additional long-lead-time material (LLTM) for the Ship-to-Shore Connector (SSC) program. The deal also included the continuation of pre fabrication activities related to the Landing Craft Air Cushion (LCAC) program. The contract was awarded by the Naval Sea Systems Command, Washington, DC.
Work related to the deal will be performed in New Orleans, LA; Leesburg, Virginia; Cincinnati, OH and various other locations across the United States. A portion of the work will also be performed in Norway and the United Kingdom. The entire task related to the contract is expected to get completed by July 2023.
A Brief Note on Textron’s SSC Program
The SSC is an air cushion vehicle and the functional replacement for the existing fleet of vehicles that are nearing the end of their service life. The SSC’s mission is to land surface assault elements in support of operational maneuver from the sea at over-the-horizon distances while operating from amphibious ships and mobile-landing platforms.
What Favors Textron?
Textron’s Marine and Land Systems unit develops the U.S. Navy’s next generation SSC program to replace the Landing Craft Air Cushion program. Furthermore, the SSC program is the segment’s primary U.S. Government program. So, no doubt, this program enjoys a robust demand in the U.S. defense space, which, in turn, is likely to boost Textron’s top line.
Per Technavio, the global amphibious landing craft market is expected to generate more than $10 billion in revenues by 2020. Such growth can be attributed to the increased use of air cushion technology being employed in landing crafts due to its numerous benefits in civil and military applications. This, in turn, should enable Textron to significantly grow in the expanding market.
Interestingly, the company anticipates the SSC program to provide modernized means of navigation for the U.S. Navy and Marine Corps on more than 80% of the world's shorelines for the next 30 years. Such strong projections, spanning over the next three decades, will be hugely beneficial to Textron.
Textron’s stock has declined about 12% in the past 12 months compared with the industry’s fall of 4.4%. The underperformance was due to intensifying competition for Textron’s products.
Zacks Rank & Stocks to Consider
Textron currently carries a Zacks Rank #4 (Sell).
A few better-ranked companies in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Teledyne Technologies Incorporated (TDY - Free Report) and Raytheon Company (RTN - Free Report) .
While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Raytheon carries a Zacks Rank #2 (Buy). 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 came up with average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 6% 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 1.8% to $10.10 cents in the past 90 days.
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