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Boeing (BA) Secures Contract to Aid Military Jet Program

The Boeing Company BA clinched a modification contract to supply two VC-25B aircraft. The award has been offered by the Air Force Life Cycle Management Center, Wright Patterson Air Force Base, OH.

Details of the Deal

Valued at $27.5 million, the contract is projected to be completed by May 16, 2024. The latest modification has brought the cumulative face value of the contract to $4.22 billion.

Work related to this deal will be carried out in San Antonio, TX.

Boeing & Rising Demand for Military Jets

With rising security threats across the globe, emerging economies like the Asia Pacific, the Middle East and South America are spending rapidly to enhance their defense arsenals. Meanwhile, other nations like Europe and the United States are already leading the defense market.

Military aircraft, both manned and unmanned, form an integral part of a country’s defense products. Notably, the emerging trends in the combat aircraft space, such as fifth-generation technology aircraft, advanced composite materials and stealth technology have been substantially driving demand for military jets.

The global military jet market is growing, with North America leading this space. Boeing, being the largest jet maker in the United States, enjoys a dominant position in the global military aircraft market. The company, therefore, enjoys a frequent flow of contracts for military jets and associated upgrades. The latest contract win is a bright example of that.

Growth Prospects

With the United States being the largest worldwide weapons exporter, the nation has been spending amply on defense products. Boeing, being a prominent jet maker, thus enjoys a dominant position in the combat aircraft market.

Per a Mordor Intelligence report, the global fixed-wing military aircraft market is expected to witness a CAGR of 6.5% during the 2022-2028 period. North America constitutes the largest share of the aforementioned market.

Such growth can be attributed to a rise in global threats and geopolitical instabilities as well as increased defense spending. These projections should benefit Boeing, along with other U.S.-based combat jet manufacturers like Northrop Grumman NOC, Lockheed Martin LMT and Textron TXT.

Since its inception, Northrop Grumman has been a pioneer in the development of combat manned aircraft. The company has a tradition of providing technological leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance and aircraft self-protection systems that enable warfighters to accomplish missions anytime and anywhere, under any condition.

NOC boasts long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for the company’s 2023 sales implies a 4.7% improvement from that reported in 2022.

Lockheed’s Aeronautics business segment is engaged in the research, design, development, manufacturing, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Its major programs include F-35, C-130 Hercules, F-16 Fighting Falcon and F-22 Raptor jets.

Lockheed boasts long-term earnings growth rate of 6.2%. The company has a solid four-quarter earnings surprise of 7.46%, on average.

Textron’s business unit, Textron Aviation Defense, designs, builds and supports versatile and globally-known military aircraft, preferred for training and attack missions. Textron Aviation’s military trainer and defense aircraft includes the T-6 trainer, which has been used to train pilots from more than 20 countries, and the AT-6 light attack military aircraft.

TXT boasts long-term earnings growth rate of 11.2%. The Zacks Consensus Estimate for TXT’s 2023 sales implies a 7.2% improvement from the previous year’s reported figure.

Price Movement and Zacks Rank

Shares of Boeing have gained 65.7% in the past year against the industry’s decline of 1.2%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Textron Inc. (TXT) : Free Stock Analysis Report

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