Bell Helicopter, a business wing of
), clinched an $85.0 million contract from the Department of
Defense ("DOD") to offer engineering and support capabilities to
two of America's close allies, Iraq and Taiwan. The Bell
helicopters provide civilian assistance and are used for air
ambulance, law enforcement and transportation services.
Iraq currently operates 30 of Bell 407 helicopters. Taiwan on
the other hand has a manufacturing unit of the UH-1H "Huey"
military helicopters licensed under Textron.
Bell helicopters have expanded its geographical footprint in
countries like Argentina, Brazil, Chile, Ecuador, Australia,
Canada, China, India, Malaysia, Mexico, New Zealand, Nigeria,
Thailand, Venezuela and Vietnam.
Prior to this, Textron secured a contract from the Delaware
State Police for the supply of Bell 429 aircrafts. It also signed
a deal with Van Horn Aviation to work jointly on the design,
certification and manufacturing of the rotor blades of Bell 212
Textron has been constantly upgrading its Bell helicopters to
provide more capacity and high-tech features which have made the
product line more attractive to foreign clients. This effort will
certainly help Textron to create long standing business
relationships with its clients.
However, contract order flows have waned owing to
across-the-board defense budget cutbacks in the U.S. Textron's
Bell Helicopter business reported a revenue decline of 4.5% year
over year to $949.0 million in the first quarter 2013.
We expect the uncertain defense environment to continue given
the budget sequestration that came into effect in March under the
Budget Control Act of 2012. Moreover, a decreasing backlog of
orders further signals a challenging business outlook for Bell
helicopter. Given the negative dynamics that are at play we
remain bearish on Textron's performance. Currently, it holds a
Zacks Rank #4 (Sell).
There are however other defense and aerospace competitors
currently performing well and deserve a look. These are
Macquarie Infrastructure Company LLC
Honeywell International Inc.
). All the above carry a Zacks Rank #2 (Buy).
Based in Providence, R.I., Textron Inc. operates in the
aircraft, defense, industrial, and finance businesses globally.
The company has a market capitalization of $7.67 billion.
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