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Textron Wins $440M Deal for Delivering Lot 16 AH-1Z Aircraft

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Textron Inc.’s (TXT - Free Report) business unit, Bell Helicopter recently secured a $439.6-million modification contract for manufacturing and delivering 25 AH-1Z aircraft of the 16th Lot along with 25 stores control units. The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.

Work related to the deal will be performed in Fort Worth and Amarillo, TX, which is expected to get completed by January 2022. Textron will utilize fiscal 2018 aircraft procurement (Navy) funds for completing the task.

A Brief Note on AH-1Z Attack Helicopters

Textron's Bell AH-1Z is built to meet the expeditionary requirements of the United States Marine Corps. With virtually identical front and rear glass cockpits, fully integrated weapons, avionics and communications systems, the Bell AH-1Z flies with the most advanced aircraft weapons and survivability equipment in the world.

The AH-1Z’s Target Sight System also provides the longest range and highest accuracy of any helicopter sight in the world. The AH-1Z carries a 20-millimeter Gatling gun, and can fire 70-millimeter Hydra rockets, AIM-9 Sidewinder air-to-air missiles and AGM-114 Hellfire air-to-ground missiles.

Our View

Textron's Bell segment is one of the leading suppliers of advanced military helicopters to the U.S. Government and military customers outside the United States. This has enabled the company to successfully secure pivotal contracts like the latest one. Apart from supplying helicopters, the segment also provides invaluable support to offshore petroleum exploration and development, emergency medical helicopter operators, and foreign governments.

With increasing geopolitical tensions worldwide, demand for weaponries is on the rise. To meet this demand, the fiscal 2019 U.S. defense budget provisioned for a spending plan of $21.7 billion on military aircraft. Such favorable budgetary provisions are ushering in contract wins for defense contractors and Textron is no exception. The latest contract win is an evidence to that.

Price Movement    

Textron’s stock decreased about 16.3% in the past year compared with the industry’s decline of 3.7%.

 

Zacks Rank & Stocks to Consider

Textron currently carries a Zacks Rank #4 (Sell).

A few better-ranked companies in the same sector are AeroVironment, Inc. (AVAV - Free Report) , The Boeing Company (BA - Free Report) and Heico Corporation (HEI - Free Report) .

While AeroVironment and Boeing sport a Zacks Rank #1 (Strong Buy), Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment came up with average positive earnings surprise of 257.01% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has increased 33.3% to $1.48 in the past 90 days.

Boeing came up with average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 4.47% to $18.22 in the past 90 days.

Heico’s long-term growth rate for the next five years currently stands at 12.10%. The Zacks Consensus Estimate for 2019 earnings has increased 4.00% to $2.08 in the past 90 days.

Zacks' Top 10 Stocks for 2019

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The Boeing Company (BA) - free report >>

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