Textron Inc.’s TXT business unit, Bell, secured a contract to aid the UH-1Y and AH-1Z helicopters. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of TXT’s Deal

Valued at $13 million, the contract is expected to be completed by December 2025. Per the terms of the deal, Textron will provide program management, engineering and logistics services for upgrading and sustainment of the AH-1Z Viper and UH-1Y Venom helicopters.
 
This contract will serve the U.S. Marine Corps as well as the governments of Bahrain and the Czech Republic. The majority of the work related to this deal will be carried out in Fort Worth, TX.

What’s Favoring TXT Stock?

With global defense spending rising amid growing hostilities across the world, investment in advanced defense products, including military helicopters, has also been increasing. These helicopters are crucial for air warfare missions. This has been providing ample opportunities for Textron to win production and modification contracts for its combat-proven helicopters in recent times. The latest contract is an example of that.
 
Notably, Textron’s AH-1Z helicopter is the only attack helicopter in the world with fully integrated air-to-air missile capability. With a speed of 200 knots and a range of 310 nautical miles, this helicopter can serve attack, aerial reconnaissance and escort missions for the military.

Moreover, TXT’s UH-1Y helicopter is known for its advanced avionics and robust performance. It excels in roles such as troop transport, search and rescue, and close air support, making it an essential asset for modern military operations.

These features of the aforementioned helicopters and the growing demand for military helicopters are likely to have been ushering in notable contracts for TXT, like the latest one. Such contract wins are likely to boost revenues from the Bell unit, which registered a solid 23.2% year-over-year revenue growth in the last reported quarter.

Growth Prospects for TXT Stock

Rising military conflicts, terrorism and border disputes, along with rapid technological advancements in military helicopters, have led nations to increase their defense spending, with combat-proven helicopters constituting an integral part of a nation’s defense structure.

This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of more than 2.9% for the military helicopter market during the 2024-2030 time period.

Such solid market prospects offer growth opportunities for Textron, with its Bell unit offering a robust portfolio of combat-proven helicopters like the Bell 360, V-280, V-22 and many more.

Opportunities for Other Defense Stocks

Other defense companies that are expected to enjoy the perks of the expanding military helicopter market have been discussed below.

The Boeing Company BA: Its military rotorcraft serves the United States and allied defense forces in more than 20 countries across the globe. Boeing’s Defense, Space & Security segment produces rotorcraft and rotary-wing programs, such as H-47 Chinook, AH-64 Apache, AH-6 Little Bird and V-22 Osprey.

Boeing has a long-term (three to five years) earnings growth rate of 19.3%. The Zacks Consensus Estimate for BA’s 2025 sales indicates year-over-year growth of 22.5%.

Northrop Grumman Corporation NOC: Its Fire Scout is a combat-proven, autonomous helicopter system. It provides real-time intelligence, surveillance, reconnaissance and target-acquisition, laser designation and battle management to tactical users without relying on manned aircraft or space-based assets.
 
Northrop has a long-term earnings growth rate of 19.1%. The consensus estimate for NOC’s 2024 sales indicates year-over-year growth of 5.3%.

Lockheed Martin Corporation LMT: Through its Sikorsky unit, it produces renowned military helicopters, which are widely used for combat, transport and rescue missions worldwide. Lockheed Martin’s military helicopter portfolio includes the Black Hawk, Seahawk and CH-53K King Stallion heavy-lift helicopters.

LMT has a long-term earnings growth rate of 4.5%. The consensus estimate for LMT’s 2024 sales indicates year-over-year growth of 5.5%.

TXT Stock’s Price Movement

TXT shares have lost 10.5% in the past six months compared with the industry’s 1.5% decline.

Image Source: Zacks Investment Research

TXT’s Zacks Rank

TXT 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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