BAE Systems (BAESY) Wins Deal for Amphibious Combat Vehicles

By Zacks Investment ResearchStock MarketsDec 27, 2021 03:30AM ET

www.investing.com/analysis/bae-systems-baesy-wins-deal-for-amphibious-combat-vehicles-200612853

BAE Systems (BAESY) Wins Deal for Amphibious Combat Vehicles

By Zacks Investment Research | Dec 27, 2021 03:30AM ET

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BAE Systems (OTC:BAESF) plc’s BAESY business unit, BAE Systems Land & Armaments L.P., recently clinched a modification contract, involving the Amphibious Combat Vehicles (ACV). Valued at $169.3 million, the contract is projected to be completed in August 2023.

Details of the Deal

The deal has been awarded by Marine Corps Systems Command, Quantico, VA. Per the deal, BAE Systems is accountable for the procurement and production of 33 full-rate ACVs. The contract also includes fielding and support costs, involving the ACV.

The majority of the work involved in the deal will be carried out in York, PA.

Growth Prospects for BAE Systems

BAE Systems’ ACV is designed in a way that could fulfill the complex mission objective of deploying Marines from ship to shore. It represents a unique mix of true open-ocean amphibious capability, land mobility, survivability, payload and also exhibits tremendous growth potential to accommodate the evolving operational needs of the United States Marine Corps (USMC).

Earlier in 2021, BAE Systems was awarded a contract worth $184 million by Marine Corps for 36 ACVs, thus taking the total number of vehicles under full-rate production to 72 for a total value of $366 million.

The ACV program was introduced by Marine Corps Systems Command to replace the aging Assault Amphibious Vehicle. In this regard, it is worth mentioning that the remarkable feature offered by BAE Systems’ ACV, as one of the most adaptable amphibious vehicles that excels in attaining expeditionary mission requirements, attracted the USMC. This resulted in multiple contract wins for BAE Systems after its approval for full-rate production in November 2020. The latest contract win is a treatment to that.

Looking ahead, per the report from Mordor Intelligence, the military amphibious vehicle market is projected to grow at a CAGR of 6% during the 2021-2026 period.

Such growth projection highlights immense potential for ACV manufacturers like BAE Systems. Going forward, BAESY may continue to secure deals from Marine Corps, involving the ACV, thus boosting its revenues from the ACV line of business.

Price Movement

In the past year, shares of BAE Systems have rallied 5.8% as compared with the industry’s growth of 9.1%.

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Zacks Rank

BAE Systems currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks from the same industry are AAR (NYSE:AIR) Corp. AIR, Aerojet Rocketdyne Holdings (NYSE:AJRD) AJRD and Elbit Systems (NASDAQ:ESLT) ESLT, each carrying a Zacks Rank #2 (Buy) You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AAR Corp. reported second-quarter fiscal 2022 adjusted earnings of 53 cents per share, which surpassed the Zacks Consensus Estimate by 1.9%. Also, AAR Corp.’s earnings recorded a solid surge of 71% from the year-ago quarter.

The Zacks Consensus Estimate for AAR Corp.’s fiscal 2022 earnings indicates a surge of 11.1% from the prior-year figure. AIR’s shares have rallied 7.6% in the past year.

Aerojet Rocketdyne Holdings’ earnings of $0.58 per share beat the Zacks Consensus Estimate of $0.47 in the third quarter of 2021, with an earnings surprise of 23.40%.

Additionally, the Zacks Consensus Estimate for Aerojet Rocketdyne’s 2021 earnings implies growth of 4.9% from the prior-year figure. AJRD’s shares have rallied 7.1% in the past three months.

Elbit Systems beat the Zacks Consensus Estimate in the last reported quarter, representing an earnings surprise of 25.95%. Over the last four quarters, Elbit Systems’ has surpassed the consensus estimates, with an average surprise of 25.86%.

Also, the Zacks Consensus Estimate for ESLT’s 2021 earnings is expected to deliver growth of 12% from the prior-year figure. Its shares have returned 29.4% to its investors in the past year.

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BAE Systems (BAESY) Wins Deal for Amphibious Combat Vehicles

Details of the Deal

Growth Prospects for BAE Systems

Price Movement

Zacks Rank

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