The U.S. Department of Defense has resumed efforts to
strengthen its artillery after budgetary woes ebbed with the
passing of Obama's $1.1 trillion Omnibus spending measure in Jan
2014. The bill allows Pentagon to utilize as much as $93 billion
for buying weapons and another $63 billion for advancing research
and development in the sector. In an attempt to optimally utilize
the funds, Pentagon has recently awarded 13 defense contracts
aggregating to about $305 million.
The companies receiving most of the contracts include
General Electric Company
CACI International Inc.
FLIR Systems, Inc.
General Electric received a two-year option contract for
providing critical service for managing the digital imaging
network-picture archive communication system for all the core
U.S. military facilities including army, navy, air force, marine
corps as well as the civilian agencies by the government. This
contract is an extension of an earlier two-year contract awarded
by Pentagon to this Zacks Rank #4 (Sell) conglomerate. It can be
further extended by one year. The fund allotted in the first
phase of the project is approximately $73 million.
CACI International's contract entails it to offer diverse
services to the U.S. Army including logistics and engineering
services as required by its various bases. The company will be
providing these services till Dec 2014. The $27.1 million
contract includes the overall costs as well as a pre-defined fee.
In 2013, revenues derived from the Department of Defense
consisted of more than 70% of the total revenues of this Zacks
Rank #3 (Hold) company
FLIR Systems received an $18.2 million contract for supply of
turrets for undisclosed weapon systems in naval operations. This
Zacks Rank #4 firm is the sole provider for these turrets that
are required to be completed by May 30, 2014.
Other major players that received contracts from Pentagon
Rockwell Collins Inc.
Lockheed Martin Corporation
Last year, most of these companies reported declining revenues
from government projects. The decline was owing to negative
impact from sequestration, budgetary constraints, funding delays
and stringent regulatory compliance by the government. However, a
welcome respite to the budgetary woes bodes well for these
companies and is likely to augment both top and bottom lines in
the upcoming quarters.
CACI INTL A (CACI): Free Stock Analysis
ROCKWELL COLLIN (COL): Free Stock Analysis
FLIR SYSTEMS (FLIR): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
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