Alliant Techsystems Inc.
) has entered into an agreement, worth $17 million, with the U.S.
Air Force (USAF) to manufacture rocket motors for the AIM-9P
sidewinder. The company's Missile Products division under its
Defense Group will be responsible for this contract. Alliant will
supply these rocket motors from its Allegany Ballistics
Laboratory in Rocket Center, West Virginia.
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This contract is under the U.S. Foreign Military Sales (FMS)
program. Under the FMS, the U.S. government acquires defense
items and services on behalf of international customers.
The rocket motors are installed to power the AIM-9P sidewinder
missile - a short-range, infrared air-to-air missile system. The
AIM-9P sidewinder is a part of the AIM-9 sidewinder missile
family and its main objective is to defuse high-performance enemy
aircraft under all weather conditions. Apart from the USAF and
U.S. Navy, the company also supplied these missiles to the North
Atlantic Treaty Organization (NATO) countries and other U.S.
allies under the FMS.
These rocket motors' proven track record enables Alliant to
become the trusted supplier for national as well as international
Alliant reported third quarter fiscal 2013 pro forma earnings of
$1.84 per share, beating the Zacks Consensus Estimate of $1.70 by
8.2%. However, quarterly results were lower than the year-ago
earnings of $2.03 per share. The company's total revenue of
$1,056.2 million surpassed the Zacks Consensus Estimate by $52.2
million but decreased 5.5% year over year.
As Alliant has an existing set-up to manufacture these kinds of
motor rockets, the company can leverage its operational position
with no fresh investments for infrastructure development, leading
to improved margins.
Alliant's two biggest clients are the National Aeronautics and
Space Administration and the U.S. Department of Defense. So, any
cutback in the U.S. defense budget could limit the company's
future growth prospects.
In this circumstance, we consider such an international, small
ticket-size contract as a finance-booster for Alliant. It will
enable the company to further strengthen its ongoing strategic
alliance with its international clients.
Arlington, Virginia-based Alliant Techsystems Inc. provides
aerospace and defense products to the U.S. government agencies.
The company and other players in the domain
Esterline Technologies Corporation
) currently have a Zacks Rank #2 (Buy).