The Boeing Company (BA) received almost a billion dollar worth of contract from the U.S. Air Force to carry out on three separate contracts. Of the trio the largest contract of $962.5 million is to build five C-17 aircraft for the U.S. Air Force. The C-17 is a large military transport aircraft.
The second contract is a $9.3 million firm-fixed-price contract modification to provide a quantity of 389 MK-82 SAASM/AJ Joint Direct Attack Munitions. The Joint Direct Attack Munition is a guidance kit that converts unguided bombs into smart bombs.
Finally the third contract is a $7.1 million modification to provide Minuteman III guidance repair. Minuteman III is a U.S. nuclear missile, a land-based intercontinental ballistic missile.
Boeing enjoys a powerful position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries, and one of the largest aerospace and defense contractors in the world. Also its revenues are spread across more than 90 countries around the globe.
Boeing at the end of the first quarter of 2011 had already amassed a backlog of $66 billion for its Defense, Space & Security segment. Boeing expects its fiscal 2011 revenue to be in the range $68 billion – $71 billion. EPS guidance range for fiscal 2011 is at $3.80 – $4.00. The guidance incorporates the tentative launch of revenue boosters like the 787 Dreamliner and 747-8 series, which would start in the third quarter and fiscal-mid of 2011, respectively. In the defense space the company also scored a major victory on getting a multi-billion U.S. Air Force Tanker contract. However, higher pension expenses and the threat of defense cutbacks will make fly low in 2011.
Over the past month, Boeing shares have been up 7.12%, over performing the S&P 500 Index which moved up only 0.74% in the same period. The company is now trading at a wide premium in terms of forward earnings estimates compared to its large cap defense prime peers like Lockheed Martin Corporation (LMT), and Northrop Grumman Corporation (NOC). So we see limited scope for outperformance by Boeing in the near-term and retain a Zacks #3 Rank (short-term Hold rating) on the stock. Over the longer run we are Neutral on the company.
BOEING CO (BA): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
Be the first to comment