Alliant Techsystems Inc. (ATK), the world's leading producer of small-caliber military and commercial ammunition, said it has received orders to produce small caliber ammunition worth more than $488 million pursuant to its contract with the U.S. Army Contracting Command, Rock Island.
Under the order, Alliant will supply a mixture of 5.56mm, 7.62mm and 0.50 caliber military ammunitions. The company said it will execute the latest ammunition order at the Lake City Army Ammunition Plant in Independence, Missouri.
Alliant Techsystems has been in associated with the U.S. Army for long now. The company has successfully partnered with the Army to design and produce the new 5.56mm cartridge known to the U.S. warfighter as the Enhanced Performance Round (EPR). The company has produced more than 100 million rounds of the M855A1 EPR since transitioning it into full-rate production last year.
Alliant said that the current set of orders shows an increase in the demand for the new M855A1 Enhanced Performance Round, which is getting very positive reviews from the warfighters. Looking ahead, the company plans to increase EPR production rates this year as it completes the modernization of high-speed, high-volume 5.56mm production equipment used to manufacture this new high performance round.
Alliant has operated at Lake City since April 2000, improving manufacturing efficiencies, increasing manufacturing rates, and partnering with the Army to modernize the facility's infrastructure, and production processes and equipment.
Last week, Alliant Techsystems released encouraging fourth quarter and full-year 2011 results, with earnings for both periods surpassing the Zacks Consensus Estimates. The company’s earnings in the said quarter were $2.10 per share, while full-year earnings reached $9.32 per share. Revenues for both the periods were also ahead of the Zacks numbers.
Going forward, Alliant expects to generate total revenue in a band of $4.6 billion to $4.8 billion for fiscal 2012. The company forecasts earnings per share of $8.00 to $8.60 for fiscal 2012. We forecast an earnings of $8.40 per share for Alliant in fiscal 2012, which lies within the company’s expected guidance range.
Minneapolis, Minnesota-based Alliant Techsystems supplies aerospace and defense products to U.S. government agencies, and its prime contractors and sub-contractors. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers.
We retain our long-term Neutral recommendation on the stock, supported by a short-term Zacks #3 Rank (Hold). On a competitive landscape, the company is ranked at par with its closest peers General Dynamics Corp. (GD) and Raytheon Co. (RTN), who also carry a Zacks #3 Rank.
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