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Boeing (BA) Wins $194M Deal for MH-47G Rotary Wing Aircraft

Zacks Equity Research

The Boeing Company BA recently won a $194.2-million modification contract for the procurement of six renew-build and one new MH-47G rotary wing aircraft. The contract was awarded by the U.S. Special Operations Command headquarters, Tampa, FL.

Majority of the work related to the deal will be executed in Ridley Park, PA. Boeing will utilize fiscal 2019 procurement, aircraft procurement and Army funds for completing the tasks.

Brief Note on MH-47G Rotary Wing Aircraft

Boeing’s MH-47G is a special operation variant of the CH-47 Chinook helicopter. The CH-47F is a twin-engine tandem rotor heavy-lift transport helicopter used by the U.S. Army and other allied nations. The helicopter is armed with two M134 7.62mm electrically operated, air-cooled mini guns and two M240 7.62mm belt-fed machine guns mounted on either side of the fuselage at the forward and rear sections. The aircraft’s primary objective is to transport troops and large payloads at high speed and long ranges. It is capable of external sling-load operations, artillery placements, battlefield resupply and air assaults.

What’s Favoring Boeing?

Boeing, being one of the major players in the defense business, stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. In particular, among other defense equipment, Boeing’s key forte lies in manufacturing combat-proven aircraft.

In recent times, the company has increased its focus on developing military aerial refueling and strategic transport aircraft for its fixed-wing military aircraft programs. Such improved capabilities along with its proven expertise in aerospace programs have enabled Boeing to clinch major contracts from the Pentagon frequently. Its MH-47 helicopter has also grown in popularity in light of increased demand from the U.S. Special Operations Forces (SOF).

Inevitably, Boeing has been witnessing strong uptick in the demand for its rotorcraft and rotary wing programs that include the MH-47G. Hence, we expect the company to witness strong demand in the days ahead.

Looking Ahead

Per Research and Markets firm, global military rotorcraft market is expected to see a CAGR of 4.28%, to $30.7 billion by 2028. Such growth can be attributed to the need for replacing aging fleets and enhancing capabilities pertaining to disaster relief operations. This, in turn, should boost further demand for Boeing’s mission critical rotorcraft and enable it to benefit from the expanding global rotorcraft market.

Price Performance

Shares of the company have only gained 8.8% in the past six months compared with the industry’s growth of 11.4%.

Zacks Rank & Key Picks    

Boeing currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are Wesco Aircraft Holdings WAIR, Northrop Grumman Corp. NOC and Leidos Holdings LDOS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 3.7% to 84 cents in the past 60 days.

Northrop Grumman came up with average positive earnings surprise of 18.50% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.26% to $19.42 in the past 60 days.

Leidos Holdings came up with average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 1.54% to $4.60 in the past 60 days.

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The Boeing Company (BA) : Free Stock Analysis Report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
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