Harris Corp. (HRS), one of the leaders in the public safety and professional communication market, recently announced that it has won a contract from the Federal Aviation Administration’s (FAA) NextGen Data Communications Program. The deal, valued at $150 million, is for a seven-year period.
FAA’s Data communications Network Services (DCNS) is planning to transform the country’s air traffic control from analog voice service to digital data communication service, hence improving the quality of the air traffic control department.
Per the agreement, Harris will be supplying terrestrial circuits and very high frequency data communication services to the DCNS department, thereby forming a strong linkage between the air traffic control team and the flight crew. Moreover, by implementing the data communication service instead of the traditional voice service, the pilots will able to get timely information regarding departure clearances, weather route, and other air traffic procedures. Such advanced services will save fuel and offer timely departures, thus improving air traffic capacity.
In total, Harris received orders worth $481 million from the DCNS department, out of which $331 million was won in Sep 2012.
Recently, Harris reported fourth-quarter 2013 financial results where the bottom line met the Zacks Consensus Estimate and the top line surpassed the same. During the quarter, the Government Communications System Segment generated $481.4 million, down 3.2% year over year. Thus, we believe that receiving such high-value orders will certainly boost the company’s top line.
Harris currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
The stocks which are performing better in the defense sector and public safety are General Dynamics Corp. (GD), The Boeing Co. (BA) and Motorola Solutions Inc. (MSI). All three surpassed the Zacks Consensus Estimate in the most recent quarter.
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