Raytheon Company RTN won a $102.9 million contract from the U.S. Navy to manufacture, test and deliver fully integrated Navy Multiband Terminals (NMT). The contract was provided by the Space and Naval Warfare Systems Command, San Diego, CA.
Per the contract, Raytheon will deliver 97% of the NMTs to the U.S. and 3% to the government of the UK under a Foreign Military Sales (“FMS”) program.
The contract will use fiscal 2015 and 2016 other procurement (Navy); fiscal 2015 and 2016 ship conversion (Navy); and foreign military sales funding. It includes options which could take the cumulative value to $466.6 million, if exercised.
Work is scheduled to be completed by Sep 30, 2018. The company will carry out 54% of the work in Largo, FL and the rest in South Deerfield, MA; Stow, MA; and Marlborough, MA.
The NMT is one of Raytheon’s Advanced Extremely High Frequency (“AEHF”) terminals currently under development. It is the next generation protected SATCOM system. Being a multiband capable satellite communications terminal, it provides both protected and wideband communications. The system will provide naval commanders and sailors with greater data and improved protection against enemy intercepts. Raytheon is the only provider of deployed AEHF terminals to the U.S. armed forces.
Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus. Its order bookings and order backlog amounted to $33.5 billion at the end of the third quarter of 2015.
Revenue and earnings growth continue to be driven by a strong presence in the areas of Intelligence, Surveillance and Reconnaissance (“ISR”); air & missile defense systems; border security; air traffic management; training and homeland security; and cyber security. Also, its non-platform centric focus insulates it from cancellation or deferral of any specific platform program.
The company enjoys strong order bookings and order backlog, an improving balance sheet and growing cash flow. Future growth will be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD.
Zacks Rank
Raytheon currently has a Zacks Rank #2 (Buy). Some of the other favorably ranked stocks from the aerospace and defense equipment industry are TransDigm Group Incorporated TDG, AeroVironment, Inc. AVAV and HEICO Corporation HEI, each carrying the same Zacks Rank as Raytheon.
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