Orbital ATK (OA) Wins $53 Million Contracts From U.S. Army

Orbital ATK (NYSE:OA) announced that it has received contracts worth of $53 million from the U.S. Army. Per the contract, the company will supply large caliber training ammunition.

A Sneak Peek into the Deal

Per the terms of the contract, the company will produce both 120mm and 105mm ammunition types and new M1002 and M724A2 rounds to fill inventories. Orbital ATK will also upgrade the existing M865 and M1002 rounds to extend their service life. These trainings rounds have similar ballistic performance and visual resemblance with the real tactical ammunition. So these training rounds can give the warfighters a realistic training experience.

Why Orbital ATK?

Orbital ATK has supplied the U.S. Army, U.S. Marine Corps and allied militaries with almost 5 million rounds of large caliber tactical and training tank ammunition.

So, it is quite evident that the company has a proven track record of high quality ammunition supply which is both reliable and affordable and makes Orbital ATK a preferred choice for large-caliber training ammunition.

Orbital’s Recent Defense Orders

In the first week of April, Orbital ATK received a $21-million order from the U.S. Navy to produce MK419 Mod 1 Multi-Function Fuze (MFF). (Read more: Orbital ATK Wins $21M Defense Order for Multi-Function Fuze)

Subsequently, the company received another $92 million small-caliber ammunition order from the U.S. Army. (Read more: Orbital ATK Secures $92 Million Order from U.S. Army)

Defense Spending to Rise

President Trump proposed a 10% hike in defense budget for fiscal 2018.

The proposed increase in the defense budget will be directed to further strengthen U.S. Navy fleet and more F-35’s to the air force present fleet. In addition, the increase in spending will enable U.S. to increase its intensity of fight against ISIS.

Orders for Defense Majors

Thanks to wide product offering these defense majors continue to receive defense contracts either from U.S. or from the allied nations. These companies are also going to benefit from the increase in U.S. defense spending.

In May, Lockheed Martin Corp. (NYSE:LMT) won a modification foreign military sales (FMS) contract worth $25 million from the U.S. Army to redesign Phased Array Tracking Radar Intercept on Target (PATRIOT), PATRIOT Advanced Capability-3 (PAC-3) and Missile Segment Enhancement (MSE) Aft Block I.

The Boeing Co. (NYSE:BA) has won a modification foreign military sales (FMS) contract from the U.S. Army for the U.K. The contract is valued at $488.1 million. It was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.

Price Movement

In the last six months, shares of Orbital ATK increased 14.3%, outperforming the Zacks categorized Aerospace – Defense Equipment industry's gain of 6.9%.

The strong order book of the company ensures continuous source of revenues for the upcoming quarters.

Zacks Rank

Orbital ATK currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Rockwell Collins, Inc. (NYSE:COL) , sporting a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

Rockwell Collins, Inc.'s 2017 Zacks Consensus Estimate moved up by nearly 17.4% to $1.62 per share in the last 60 days.

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