The Boeing Company BA recently clinched a $33-million contract involving the Small Diameter Bomb I (SDB-I). The award has been offered by the Air Force Life Cycle Management Center, Eglin Air Force Base, FL.
Details of the Deal
Valued at $33 million, the contract is scheduled to be completed by Mar 31, 2028. Per the terms of the deal, Boeing will offer sustainment and titled contractor logistics support for SDB-I. The contract also involves the provision of continuous contractor logistics support throughout the production, fielding and sustainment of (SDB-I).
The work related to this deal will be executed in St. Louis, MO.
What’s Favoring Boeing?
With the rising geopolitical tension, nations are strengthening their defense capabilities to deter any warfare situation. This involves augmented investments in ammunition, thus ensuring deterrence and efficient military capabilities in the ever-evolving security threats to maintain a strategic edge in warfare capabilities.
This tends to benefit companies like Boeing that are engaged in the manufacturing of ammunition. Boeing’s SDB-I enjoys significant demand as it is considered to be a low-cost and low collateral-damage precision strike weapon for internal and external carriage. Due to its advanced features, the product witnesses a steady order inflow, like the latest one.
Other notable ammunition in BA’s product portfolio include Joint Direct Attack Munition, Laser Joint Direct Attack Munition, Harpoon Block II and Powered Joint Direct Attack Munition, in which the Navy has substantial interest due to their advanced capabilities in the military sector.
Going forward, per the report from the Markets and Markets firm, the ammunition market is poised to witness a CAGR of 3.7% over the 2021-2026 period. This may result in further ammunition orders for Boeing. Such a consistent order inflow is likely to boost Boeing’s orderbook and thereby bolster its revenue generation prospects.
Peer Prospects
The aforementioned market’s growth prospects are likely to benefit other defense companies that have a solid presence in the combat ammunition space, such as Lockheed Martin LMT, RTX Corporation RTX and Northrop Grumman NOC.
Lockheed Martin provides a wide variety of highly effective and reliable weapon systems. These weapon systems include precision strike weapons with long standoff ranges and smart submunitions to give the warfighter maximum flexibility and fire support mobile artillery and guided munitions to dominate the battlefield.
Lockheed boasts a long-term earnings growth rate of 8.6%. The Zacks Consensus Estimate for its 2023 sales suggests a growth rate of 0.9% from the prior-year reported figure.
RTX manufactures ammunition ranging from shoulder-fired weapons to extended-range precision munitions. Its product portfolio includes Excalibur, the TOW weapon system and a few more.
RTX’s long-term earnings growth rate is pegged at 9.4%. Shares of RTX have returned 6.9% value to its investors in the past month.
Northrop’s ammunition include air-bursting, proximity and guided munitions, which provide greater precision and the ability to counter unmanned threats and defeat advanced armor. Its portfolio of ammunition includes M865 kinetic energy and the M1002, 120mm M829, M830, M908, M1028 and M1147 cartridges and a few more.
Northrop boasts a long-term earnings growth rate of 2.4%. NOC stock has appreciated 8.5% in the past three months.
Price Performance
Shares of Boeing have rallied 24.8% in the past year against the industry’s fall of 12.2%.
Image Source: Zacks Investment Research
Zacks Rank
Boeing carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
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RTX Corporation (RTX) : Free Stock Analysis Report
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