Textron's Unit Wins Navy Deal to Aid Mine Sweeping Mission

Zacks Equity Research

AAI Corporation, an operating unit of Textron Systems, a Textron Inc. TXT company, recently clinched a modification contract worth $11 million in association with a minesweeping surface vehicle. The unit will offer engineering and technical services for the Unmanned Influence Sweep System (UISS) unmanned surface vehicle platform.  

The contract has been awarded by the Naval Sea Systems Command, Washington, D.C. Majority of the work will be executed in Hunt Valley, MD. The deal is expected to be completed by September 2019.

A Brief Note on UISS

The UISS is one of those systems which enable the littoral combat ship to perform its mine warfare sweep mission. UISS will target acoustic, magnetic, and magnetic/acoustic combination mine types only. The UISS program is expected to meet the Navy’s need for a rapid, wide-area coverage mine clearance capability, required to neutralize magnetic/acoustic influence mines.

Why Textron?

The U.S. Navy’s Littoral Combat Ship (LCS) Mine Countermeasures (MCM) Mission Package (MP) supports MCM operations through the employment of aviation assets and unmanned surface, semi-submersible and submersible vehicles equipped with an array of sensors and systems to detect, localize and neutralize surface, near surface, in-volume and bottom mines.

With rising geopolitical tensions across the globe, the U.S. government, under the rule of President Trump, has been escalating the adoption of more modern defense weaponries for the last couple of years. In this line, the fiscal 2019 Navy budget provisioned for a lumpsum spending provision of almost $150 billion, for strengthening the nation’s marine security. The latest contract win by Textron is an example to that.

Considering the nation’s attempt to strengthen its Naval force and the fact that Textron Systems is known for offering advanced marine services, we can expect more similar contracts to usher in for the company from Pentagon. This, in turn, will likely boost its profit margin.

Price Performance

Shares of Textron have lost about 19% in the past year compared with the industry’s decline of 7.2%.

Zacks Rank & Stocks to Consider

Textron currently carries a Zacks Rank #4 (Sell).

A few better-ranked companies in the same sector are AeroVironment, Inc. AVAV, Lockheed Martin Corporation LMT and Northrop Grumman Corporation NOC.

While AeroVironment and Lockheed Martin sport a Zacks Rank #1 (Strong Buy), Northrop Grumman holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment came up with average positive earnings surprise of 257.01% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings moved up 33.3% to $1.48 in the past 90 days.

Teledyne Technologies generated average positive earnings surprise of 12.92% in the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings moved 5.26% north to $9.00 in 90 days’ time.

Northrop Grumman delivered average positive earnings surprise of 28.01% in the preceding four quarters. The Zacks Consensus Estimate for 2019 earnings moved 3.53% upward to $18.44 in the past 60 days.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research