Rockwell Collins, Inc. COL recently won a $32.8-million modification contract for providing non-recurring engineering and technical data services associated with the E-2D Hawkeye Integrated Training Systems. The contract was awarded by the Naval Air Warfare Center Training Systems Division, Orlando, FL.
Details of the Deal
Per the terms of the deal, Rockwell Collins will also engage in the production and delivery of a single Simulated Maintenance Trainer Device. The company will also upgrade power plant trainers and personal computer simulators for aircraft concurrency and increased training capability.
Work related to the contract will be performed in Norfolk, VA and is expected to get completed in September 2020. Rockwell Collins will utilize fiscal 2017 and 2018 aircraft procurement (Navy) funds for completing the task.
Brief Note on E-2D Hawkeye Integrated Training System
Rockwell Collins’ E-2D Advanced Hawkeye Integrated Training System for Aircrew (HITS-A) provides the U.S. Navy with advanced radar, aircraft systems and avionics that help in improving supportability and increase readiness. The HITS-M includes instructor-led training, computer-aided instruction, interactive courseware, a simulated maintenance trainer and a power plant trainer. The U.S. Navy named Rockwell Collins the prime contractor for HITS-M, the first integrated E-2D maintenance training system.
Our View
The company’s Commercial Systems division, which provides simulation and training systems, reported sales of $669 million in the fiscal third quarter, subsequently generating a year-over-year revenue growth of 1.7%, driven by higher original equipment sales. Considering the latest contract win, we may expect the Commercial Systems unit to reflect similar solid performance in the upcoming quarterly results as well.
Furthermore, Rockwell Collins made some notable accomplishments in the fiscal third quarter, pertaining to its simulation and training systems. One of them was a contract with TRU Simulation+Training, a Textron TXT company. Per the terms of this deal, Rockwell Collins will be providing its integrated visual systems for 15 systems over the next three years for several of TRU’s commercial full flight-simulator clients for commercial airlines and airframe manufacturers. Considering these recent developments, we may expect the company to reflect notable growth in its Commercial Systems business segment, in days ahead.
Price Movement
Rockwell Collins’ stock has improved about only 4.4% in the last year compared with the industry’s growth of 20.1%. The underperformance may have been caused by the intense competition that the company faces along with high exposure to fixed-price contracts.
Zacks Rank & Stocks to Consider
Rockwell Collins currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same sector are Aerojet Rocketdyne Holdings AJRD and Engility Holdings EGL.
While Aerojet Rocketdyne Holdings sports a Zacks Rank #1 (Strong Buy), Engility Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Aerojet Rocketdyne came up with an average positive earnings surprise of 9.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 30.9% to $1.27 in the last 90 days.
Engility Holdings delivered an average positive earnings surprise of 19% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 16.8% to $2.02 in the last 90 days.
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