We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
RTX Secures a $94M Navy Contract to Support the ESSM Program
Read MoreHide Full Article
RTX Corp. (RTX - Free Report) recently clinched a modification contract involving the Evolved Sea Sparrow Missile (ESSM) program. The award has been provided by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $94.1 million, the contract is expected to be completed by March 2027. Per the terms of the deal, RTX will supply guided missile assemblies, shipping containers, and spare parts to support full-rate production requirements for the ESSM Block 2 program.
A major portion of work related to this deal will be carried out in Tucson, AZ and Raufoss, Norway.
How Will the Deal Favor RTX?
The increasing geopolitical tensions worldwide have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. With the United States being the world’s largest weapon supplier and RTX being a prominent U.S. missile maker, the increased missile defense adoption by nations provides the company with solid growth opportunities.
To this end, it is imperative to mention that the ESSM is an international cooperative upgrade of the RIM-7 Seasparrow Missile and provides firepower against high-speed, highly maneuverable anti-ship missiles in the naval environment. With more than 2,000 proven rounds in service or production and another 1,500 rounds anticipated based on customer requirements, the ESSM missile is expected to be supported through 2030 and beyond.
This statistic indeed reflects the solid demand that ESSM enjoys in the missile market, which in turn ushers in a steady flow of contracts for RTX, like the latest one. Such order flows, in turn, are projected to boost the company’s top-line performance in future quarters.
Growth Prospects
As nations across the globe are expanding their defense spending to strengthen their borders against unprecedented foreign attacks and internal hostilities, the market for missiles has also been flourishing manifold.
In this context, the Morder Intelligence firm forecasts the missiles and missile defense system market to witness a CAGR of 4.8% over the 2023-2028 period.
With RTX being a prominent supplier of missile products, surely such a solid market growth projection offers this company more opportunities to expand in the coming years. RTX’s product portfolio includes a variety of combat-proven missile defense systems like the Patriot missile, Standard Missile-6, Standard Missile-3, Advanced Medium-Range Air-to-Air Missile, Tomahawk cruise missile and a few more.
Peer Opportunities
RTX apart, other defense majors who have fortified their position in the missile market and are thus poised to enjoy the perks of this expanding market growth opportunities are discussed below.
Northrop Grumman (NOC - Free Report) : Its missile defense program includes AGM-88E advanced anti-radiation guided missiles, the ground-based Strategic Deterrent weapon system and rocket propulsion systems. In August 2022, the company had been chosen by the U.S. Missile Defense Agency to lead the Homeland Missile Defense Program.
NOC boasts a long-term earnings growth rate of 2.4%. The Zacks Consensus Estimate for its 2023 sales suggests an improvement of 6.6% from the 2022 reported figure.
Lockheed Martin (LMT - Free Report) : Its missile defense program includes the Patriot Advanced Capability-3 (PAC-3) and Terminal High-Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, the Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.
The stock has a long-term earnings growth rate of 8.6%. LMT boasts a four-quarter average earnings surprise of 4.35%.
The Boeing Company (BA - Free Report) : For almost 25 years, Boeing-built and supported air and missile defense systems have protected the nation, warfighters, allies and international partners against threats ranging from intercontinental ballistic missiles to hostile aircraft. BA’s missile and missile portfolio includes Aegis Ballistic Missile Defense, Avenger, Ground-Based Midcourse Defense and PAC-3 Missile Seeker.
The Zacks Consensus Estimate for Boeing’s 2023 sales indicates an improvement of 15.6% from the 2022 reported figure. The stock has a long-term earnings growth rate of 4%.
Price Performance
In the past year, RTX’s shares have lost 17.2% compared with the industry’s 12.8% decline.
Image: Bigstock
RTX Secures a $94M Navy Contract to Support the ESSM Program
RTX Corp. (RTX - Free Report) recently clinched a modification contract involving the Evolved Sea Sparrow Missile (ESSM) program. The award has been provided by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $94.1 million, the contract is expected to be completed by March 2027. Per the terms of the deal, RTX will supply guided missile assemblies, shipping containers, and spare parts to support full-rate production requirements for the ESSM Block 2 program.
A major portion of work related to this deal will be carried out in Tucson, AZ and Raufoss, Norway.
How Will the Deal Favor RTX?
The increasing geopolitical tensions worldwide have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. With the United States being the world’s largest weapon supplier and RTX being a prominent U.S. missile maker, the increased missile defense adoption by nations provides the company with solid growth opportunities.
To this end, it is imperative to mention that the ESSM is an international cooperative upgrade of the RIM-7 Seasparrow Missile and provides firepower against high-speed, highly maneuverable anti-ship missiles in the naval environment. With more than 2,000 proven rounds in service or production and another 1,500 rounds anticipated based on customer requirements, the ESSM missile is expected to be supported through 2030 and beyond.
This statistic indeed reflects the solid demand that ESSM enjoys in the missile market, which in turn ushers in a steady flow of contracts for RTX, like the latest one. Such order flows, in turn, are projected to boost the company’s top-line performance in future quarters.
Growth Prospects
As nations across the globe are expanding their defense spending to strengthen their borders against unprecedented foreign attacks and internal hostilities, the market for missiles has also been flourishing manifold.
In this context, the Morder Intelligence firm forecasts the missiles and missile defense system market to witness a CAGR of 4.8% over the 2023-2028 period.
With RTX being a prominent supplier of missile products, surely such a solid market growth projection offers this company more opportunities to expand in the coming years. RTX’s product portfolio includes a variety of combat-proven missile defense systems like the Patriot missile, Standard Missile-6, Standard Missile-3, Advanced Medium-Range Air-to-Air Missile, Tomahawk cruise missile and a few more.
Peer Opportunities
RTX apart, other defense majors who have fortified their position in the missile market and are thus poised to enjoy the perks of this expanding market growth opportunities are discussed below.
Northrop Grumman (NOC - Free Report) : Its missile defense program includes AGM-88E advanced anti-radiation guided missiles, the ground-based Strategic Deterrent weapon system and rocket propulsion systems. In August 2022, the company had been chosen by the U.S. Missile Defense Agency to lead the Homeland Missile Defense Program.
NOC boasts a long-term earnings growth rate of 2.4%. The Zacks Consensus Estimate for its 2023 sales suggests an improvement of 6.6% from the 2022 reported figure.
Lockheed Martin (LMT - Free Report) : Its missile defense program includes the Patriot Advanced Capability-3 (PAC-3) and Terminal High-Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, the Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.
The stock has a long-term earnings growth rate of 8.6%. LMT boasts a four-quarter average earnings surprise of 4.35%.
The Boeing Company (BA - Free Report) : For almost 25 years, Boeing-built and supported air and missile defense systems have protected the nation, warfighters, allies and international partners against threats ranging from intercontinental ballistic missiles to hostile aircraft. BA’s missile and missile portfolio includes Aegis Ballistic Missile Defense, Avenger, Ground-Based Midcourse Defense and PAC-3 Missile Seeker.
The Zacks Consensus Estimate for Boeing’s 2023 sales indicates an improvement of 15.6% from the 2022 reported figure. The stock has a long-term earnings growth rate of 4%.
Price Performance
In the past year, RTX’s shares have lost 17.2% compared with the industry’s 12.8% decline.
Image Source: Zacks Investment Research
Zacks Rank
RTX carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.