Boeing Secures a Contract for C-17 Globemaster III Enhancements

The Boeing Company BA recently secured a $24.5 million contract to carry out enhancements for the C-17 Globemaster III jet program. The contract involves conducting studies, implementing quick-reaction tasks and providing integrated software and hardware upgrades to improve the aircraft's capabilities.
 
The work related to this deal will be carried out at Edwards Air Force Base, CA. The deal is projected to be completed by Dec. 1, 2031.

What’s Favoring BA?

With global defense spending rising amid growing hostilities across the world, investment in advanced defense products, including military transport aircraft, has also been increasing. These aircraft serve a nation in military operations as well as other crucial missions such as troop transportation as well as humanitarian missions and disaster relief operations.
 
With Boeing being a prominent manufacturer of renowned, combat-proven aircraft across the globe, jets from its product portfolio enjoy solid demand when it comes to the transportation of military troops or other first responders in varied operations. The latest contract win is an example of that.

Notably, BA’s C-17 Globemaster III boasts the ability to carry large equipment, supplies and troops directly to small airfields in harsh terrain anywhere in the world. It serves as the primary strategic lift aircraft for the U.S. Air Force for global transport of troops and equipment.

The 275 C-17 aircraft is currently being operated worldwide, which is further proof of its solid demand.

Growth Opportunities for BA

Increasing warfare situations across the globe resulting in growing troop deployment have been boosting the usage of military transport aviation for airlifting troops, medical evacuation, firefighting and rescue missions in harsh environments. The use of such aircraft to transport refugees and immigrants as a result of regional military conflicts has also been boosting the need for high-capacity transport jets.
 
This must have prompted IMARC to project that the global military transport aircraft market will witness a CAGR of 2.5% during the 2024-2032 period.
 
Such growth opportunities offered by the military transport aircraft market are likely to benefit America’s largest jet maker, Boeing. Apart from C-17, the company’s product portfolio includes the CH-47 Chinook helicopter, which is an advanced, multi-mission, tandem-rotor helicopter. The helicopter is mainly used for cargo and troop transport, search and rescue, casualty evacuation, special operations, humanitarian and disaster relief.

BA’s Peer Prospects

Other defense companies that are likely to benefit from the expanding global military transport aircraft market are discussed below.

Lockheed Martin Corp. LMT: Its C-5 Galaxy is the U.S. Air Force’s largest and only strategic airlifter. It can carry more cargo to greater distances than any other aircraft. With a payload of six Mine Resistant Ambush Protected vehicles or up to five helicopters, the C-5 can haul twice as much cargo as any other airlifter.

The company has a long-term earnings growth rate of 4.7%.  The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.2%.

Embraer S.A. ERJ: Its C-390 Millenium is a new-generation military multi-mission transport aircraft with unrivaled mobility and operational flexibility in a single platform. This aircraft provides air forces with optimal fleet performance generated by a cost-effective combination of high availability and productivity.

The company boasts a trailing four-quarter average earnings surprise of 52.28%.  The Zacks Consensus Estimate for ERJ’s 2024 sales indicates year-over-year growth of 19.1%.

Airbus Group EADSY: Its C295 is a robust, reliable and highly versatile tactical transport aircraft that is tailored for missions that range from carrying troops and cargo, maritime patrol, airborne warning, surveillance and reconnaissance to signals intelligence, armed close air support, medical evacuation, VIP transport and airborne firefighting. Currently, more than 200 C295 jets are in operation globally.
 
The company has a long-term earnings growth rate of 12%.  The Zacks Consensus Estimate for EADSY’s 2024 sales indicates year-over-year growth of 5.4%.

BA Stock’s Price Movement

In the past three months, shares of Boeing have lost 19.9% against the industry’s 1.9% growth.

Image Source: Zacks Investment Research

BA’s Zacks Rank

Boeing currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Boeing Company (BA): Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
 
Embraer-Empresa Brasileira de Aeronautica (ERJ): Free Stock Analysis Report
 
Airbus Group (EADSY): Free Stock Analysis Report

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