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Boeing Wins $60M Air Force Contract for FMS to Saudi Arabia

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The Boeing Co.BA has won a foreign military sales ("FMS") contract from the U.S. Air Force for deliverables to support the Saudi Arabian military.

Contract Details

The contract is valued at $59.9 million. It was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.

Per the contract, Boeing will provide one Database Generation System, one Full Mission Trainer (FMT)/Integrated Avionics Trainer (IAT) database, convert the Boeing Aircrew Trainer-Continuous resolution visual system (BAT-C) into an FMT, transform the BAT into an IAT and manufacture one FMT.

Work is scheduled to be complete by Jun 30, 2019 and will be executed in St. Louis, MI and Saudi Arabia.

Why Boeing?

Boeing witnesses a steady flow of contracts from the Pentagon as well as international customers. It is one of the major players in the defense business. Its defense business stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog.

Internationally, the company is witnessing strong demand for its defense products, such as fighter jets, the rotorcraft lineup and 737-based military derivatives. Given the ongoing budget volatility, rising foreign military sales contracts are more than welcome. In 2015, non-U.S. customers accounted for approximately 59% of Boeing's revenues. During the third quarter, international demand remained strong, accounting for 38% of the backlog and 27% of revenues at the Boeing Defense, Space & Security ("BDS").

Price Movement

Boeing's stock has gained about 9.9% in the last one year, underperforming the Zacks Categorized Aerospace/Defense industry's gain of 11.8%. This could be because Boeing continues to face challenges from uncertainties related to high-cost programs, risks related to key project executions, order cancellations and stiff competition.

Zacks Rank & Key Picks

Boeing currently has a Zacks Rank #3 (Hold). A few better ranked stocks in the aerospace and defense space include Engility Holdings, Inc. EGL , Northrop Grumman Corporation NOC and Leidos Holdings, Inc. LDOS .

On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company's 2016 earnings estimates increased 13.4% over the last 60 days. Engility sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company's 2016 earnings estimates were up just 0.1% in the last 30 days.

Leidos Holdings carries a Zacks Rank #2 (Buy). The company's 2016 earnings estimates increased 10.6% over the last 30 days. On an average, the company has delivered a positive earnings surprise of 12.20% in the trailing four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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